More first-time investors bet big on desi startups in 2021

Chennai: In a year of record funding rounds, birth of over 40 unicorns, and heightened liquidity, the number of new and first-time investors who made bets in Indian tech startups almost doubled in 2021. While 691 new investors invested in Indian startups in 2019, this count of first-time investors grew to 1145 in 2021, as per data from research firm Tracxn. This count stood at 708 in 2020. As per Tracxn’s data, a few new investors who backed the country’s startups include American firms GoodWater Capital, 2AM VC, Goat Capital, and others. South Korean game publisher Krafton also turned investor this year backing gaming startup Nodwin Gaming. Homegrown new VC firms such as Multiply Ventures and GetVantage also backed startups such as Clever Harvey and The Ayurveda Co respectively among other companies. Further, low yields and increased tensions between the US and China, and China’s crackdown on tech companies have worked in India’s favor and put it in a macro-economic and geo-political sweet spot. The number of international investors with investments in Indian tech startups grew from 697 investors in 2019 to 990 in 2021 with the share of investors based in the US and UAE rising and money from China and Japan falling steeply. The proportion of investors from the US investing in India has grown gradually from 44% in 2019 to 51% in 2020 to 53% in 2021. The ratio of Chinese investors backing Indian startups has declined by almost half — from 7% in 2019 to 3% in 2021. “With global fixed income yields at record lows, allocation of investments to emerging markets by global LPs is on the rise. India’s strong consumption base combined with its favorable geopolitical and macroeconomic positioning has made it an attractive destination for large investors,” Vivek Soni, EY, said. Coming off a year of record PE/VC investments and exits in 2021, EY expects 2022 to be bigger by at least 20%. “We anticipate newer PE firms to take notice of the Indian market and open their investment positions here,” Soni said. Anjali Bansal, Founder, Avaana Capital, said the pandemic has accelerated digitization across sectors like education, agriculture, healthcare, supply chains etc. and the Indian startup ecosystem is also maturing with seasoned entrepreneurs returning for their next stints.