Notwithstanding the disruption caused by the pandemic, Indian consumer internet companies continued to win the support of investors in 2020, raising a little over $8 billion, data sourced from market research firm Tracxn showed.
Companies had attracted investments worth about $11.21 billion in 2019.
The food-tech and ed-tech segments were the clear winners, as demand from home-bound consumers soared, cornering bulk of the investments. Zomato closed a $660-million financing round backed by 10 new investors at a post-money valuation of $3.9 billion while rival Swiggy raked in about $156 million in two tranches.
Ed-tech player Byju’s alone secured more than $1 billion from investors; Unacademy, Eruditus and Vedantu collectively bagged over $500 million in funding.
More than 10 start-ups across sectors ranging from beauty to payments turned unicorn in 2020 against nine in 2019. In fact, an estimated 65-70% of the investors who had placed their bets on the sector in 2019 invested again in 2020. Separately, B2B internet firms raised close to a billion dollars in 2020 compared with $3.56 billion in 2019, the data showed.
The spate of fundraises in a pandemic year is not surprising given that Covid-19 has only expedited consumers’ adoption of digital platforms. At the end of 2020, India had about 570 million active internet users against about 480 million in 2019, according to Counterpoint Research. As more users came online, companies needed to spend less on customer acquisition.
“In certain sectors such as ed-tech, health-tech, groceries, fin-tech, it became relatively easy to grow at a lower cost,” Atit Danak, principal and head of CoNXT at Zinnov, said.
Firms have also been quick to branch out to other segments, broadening their revenue streams — for instance PhonePe launched a slew of financial products focused on consumers while recently Dailyhunt forayed into the short-video space with Josh. “There is a limit in terms of how much Arpus can grow and many a time unlocking more markets provides a better return on capital invested,” Danak pointed out.