Indian startup industry has established a reputation of its own in the world. The third largest startup ecosystem in the world has had an eventful journey so far and has constantly climbed the popularity charts among investors worldwide.
According to a recent CB Insights report, investors from the United States, Singapore, Hong Kong, Japan and UK have had an encouraging confidence in the Indian tech Startup Ecosystem and have been some of the most active foreign participants in India’s startup deals over the past five years. Among these, US-based investors have been the most active participants.
The report also mentioned that with over 800 equity deals being made over the five years period, the US-based investors have also emerged as the second most active grouping since the year 2012, after India or Mauritius-based investors.
While US-based investors occupy the numero uno position on the list of most active foreign investors, Singapore with five per cent of the deals, Hong Kong with three per cent, Japan with two per cent and UK with one per cent take up second, third, fourth and fifth position respectively.
The CB Insights report also revealed that not only have US-based investors invested their money in Indian Startup Ecosystem, they have invested money in some of the most popular startups in the Indian subcontinent. For example, Tiger Global has backed in numerable Indian startup superstars, such as Flipkart, Ola, and ShopClues. Another major foreign investor in the Indian startup land, is Japan-based Softbank which recently pumped in a whopper USD 1.4 billion investment in Indian e-wallet major Paytm.
Another major head turned in the Indian Investor space, is Hong Kong-based Saif Partners, which has successfully closed a large number of deals as well since the past five years. The firm has backed popular Indian startups such as Paytm and Urban Ladder
“Excluding India and Mauritius, deal participation is heavily tilted toward investors from the United States, which has seen 800 disclosed equity deals to Indian startups since 2012 — more than four times the number of deals by investors from Singapore,” read the report.
It is interesting to note that India and Mauritius-based investors make up for a whopping 61 per cent of the startup deals taking place in the South Asian country. Foreign investors have shown major confidence in the ecosystem and invested large amounts of cash. US-based Accel Partners has made its largest investment in Indian ecommerce titan Flipkart through the overseas unit rather than its Indian unit.
Foreign investments are now expected to get a major push because of the recently released government order allowing convertible notes as a fundraising option for startups from foreign individuals into early-stage firms. Last week, India’s Commerce Ministry in its consolidated FDI policy document, for the first time included startups, which can raise up to 100 per cent of funds from Foreign Venture Capital Investor (FVCI).