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VC investment in India rose to $3.6 bn in Q3: KPMG

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Venture capital investment in India rose from $1.5 billion in the second quarter of this year to $3.6 billion in Q3 despite concerns related to Covid-19 and geopolitical tensions, according to a new report by KPMG Private Enterprise on Thursday.

At a sector level, edtech was very strong in India during Q3, with numerous deals, including Byju’s ($500 million), Unacademy ($150 million), Eruditus Executive Education ($113 million), and Vedantu ($100 million), said the quarterly “Venture Pulse” report.

“The clear standout sector for VC investment in India has been edtech. This has been true for the past couple of quarters, but this quarter the list of deals just goes on and on. It’s quite a diverse area, going well beyond the traditional K-12 model,” Nitish Poddar, Partner and National leader — Private Equity, KPMG in India said in a statement.

“There are digital offerings focussed on competitive exams, engineering or medical entrance exams — even programs to teach coding to children. It’s a very hot area for investment and will likely remain so for some time.”

The global VC investment also rose from $70 billion across 5,674 deals in Q2 to $73.2 billion across 4,861 deals in Q3.

The strong level of investment was buoyed by a significant number of large, late stage funding rounds in different jurisdictions, including three $1 billion+ megadeals – US-based aerospace company SpaceX ($1.9 billion), China-based automotive company Weltmeister ($1.5 billion), and India-based online retailer Flipkart ($1.3 billion).

VC-backed exit activity rose to $156 billion during Q3 — up from just $49.2 billion in Q2 and nearing the record high of $171 billion set in Q2 2019.

The report showed that VC investment in pharma and biotech remained very hot in Q3.

VC investment is expected to remain quite steady heading into Q4.

Late stage deals are expected to remain a top priority for VC investors, which will likely continue to make it difficult for early stage companies to attract investment, said the report, adding that on a sector basis, fintech, business productivity, edtech, healthtech and biotech are all expected to remain very attractive.

“India continues to be attractive market for VC investors. With the impact of the pandemic and the new normal paving the way for disruption in business models, there is significant demand in the EdTech, HealthTech & FinTech segments,” said Amarjeet Singh, Partner, KPMG in India.

“While funding is likely to be on the rise in Q4 of 2020, investment is expected to pick up substantially again by the end of the year.”


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