India's PE Investments in 2018 is Highest Ever at $33 Billion

Private Equity (PE) investments in India rose to their highest ever figure of $33.1 billion in 2018, according to data from Venture Intelligence, a research service focused on private company financials.

According to the research firm, PE investments had already surpassed the previous high - $24.3 Billion across 734 deals in 2017 – in the first nine months of 2018, big ticket investments in Swiggy and Byju's towards the end of the year catapulted the year’s investment tally by 36% year-on-year.

The year 2018 witnessed 81 PE investments worth $100 million or more (accounting for 77% of the total investment value during the period), compared to 47 such transactions in 2017. Of these, 40 were larger than $200 million each (by themselves accounting for 60% of the total value) - compared to 30 such investments in the year ago period, the note from Venture Intelligence said.

Led by the $1 Billion investments in Swiggy from South Africa-based Naspers and others and Oyo (led by SoftBank, IT & ITeS companies accounted for 32% of the PE investment pie in 2018 (attracting $10.6 Billion across 383 deals). Food delivery app maker Swiggy had started the year with a $100 million investment led by Naspers, followed it up with mid-year $210 million raise (co-led by Naspers and DST Global) and polished the year off with a $1 Billion investment (led by Naspers and Tencent). Hotel chain Oyo raised $800 million (with an additional commitment for $200 million) led by SoftBank Vision Fund. Paytm raised $445 million from SoftBank and Alibaba for its E-commerce business, Paytm Mall and $356 million from Berkshire Hathaway at the parent company (One 97 Communications) level.

Other large ticket IT & ITeS investments in 2018 included the $300 million attracted by online payment gateway service BillDesk from Temasek and others; the $236 million raise by online insurance broker PolicyBazaar (led by SoftBank) and the $410 million (across two rounds) raised by Swiggy competitor Zomato. Other notable tech companies that attracted rounds of $100 million or more during the year included payments enabler Pine Labs, event ticketing service Bookmyshow, regional language social app ShareChat, music service Gaana.com and fantasy gaming startup Dream11, said Venture Intelligence.

Financials Services companies, led by the HDFC and Star Health Insurance, attracted 72 investments worth $5.9 Billion and included 17 deals of $100 million or more.

“The mid-year Walmart-Flipkart deal clearly re-energized international investors’ appetite for mega bets in Indian Internet & Mobile companies. This has helped offset the slowdown in investments in sectors like Financial Services, Manufacturing and Infrastructure towards the year end triggered by nervousness in the public markets and the IL&FS scare,” said Arun Natarajan, Founder of Venture Intelligence. “Whether the PE investment tally of 2019 can outdo the highs of 2018 seems set to hinge substantially on Global Economic trends in the New Year and the outcome of the upcoming National Elections,” he added.

According to an another report by Venture Intelligence in October, Japanese multinational telecommunications and Internet corporation, SoftBank has alone contributed over USD 4 billion of the investment value or 24% of the total PE investments in the first nine months of year-2018.

In September quarter of last year, the private equity & venture capital (PE/VC) investments in Indian startup ecosystem reached a whopping $8.7 billion, according to a report by research company Ernst and Young (EY). The figure at that time was significantly higher than what was recorded for the same period of year 2016.

In July-September 2017 quarter, Indian startups witnessed a total of nine $200-million-plus deals, with SoftBank’s $2.5 billion investment in Indian e-commerce giant Flipkart being the largest PE investment ever recorded in the Indian subcontinent.

Source - Economic Times

IIT-Madras Incubated A Startup To Help Other Startups in Early-Stage

The Indian Institute of Technology-Madras (IIT-Madras) has incubated a startup whose objective was to help other startups. Named as YNOS Venture Engine CC (Catalyse & Create) Pvt Ltd, the startup is nurtured at the incubation cell at IIT-M’s Research Park and works to enhance the success of early stage startups using Machine Learning and Data Sciences tools and techniques.

Founded by Prof Thillai Rajan, Department of Management Studies, IIT-M, who has been researching Indian Venture Industry for close to a decade now, has tremendous insights into funding issues at start-ups and he thus decided to start a venture himself and launch YNOS Venture Engine.

According to Thillai, only 6-7 percent of startups are able to raise the first round of external funding, which is low. The number improves in subsequent rounds, he says, going to 15 percent in the second round and 20 percent in the next.

It is the first round of external funding that is critical for any start-up, says Thillai. Startup founders have two options before them -- either they can bootstrap the venture and fund it internally. But then, because of nature of business model of most of them,they want to focus on growth, for which external funding becomes necessary. Tillai thus, through YNOS, seeks to improve funding chances of entrepreneurs of such startups in early stage.

YNOS has raised seed funding by IIT-M's incubation cell & Venture Intelligence, a Chennai-based market research & analysis firm.

Speaking about this venture, Prof Thillai Rajan said, “Information and decision making analytics are not easily accessible for early stage entrepreneurs. Sell-side intermediation is virtually nil for early stage start-ups. YNOS uses research insights and technology to provide information and intermediation services for early stage entrepreneurs. Using advanced marker analytics tools, our platform provides estimates of valuation and also identify appropriate investors for the start-up.”

[caption id="attachment_124521" align="aligncenter" width="700"] Prof Thillai Rajan (FIRST LEFT, SEATED), Department of Management Studies, IIT Madras, and Founder, YNOS Venture Engine CC Private Limited, with the Team Members[/caption]

The time has never been better for venturing and creating startups. However, startup mortality rates have not fallen. While the funding landscape has expanded, it has also become more complex. The proportion of startups getting funded is still low. The challenges continue to confound the early stage entrepreneurs.

The objective of YNOS is to help the start-up founders to navigate the terrain in the early stages of their venture lifecycle. The technology platform and hybrid offerings have been designed to cater to specific needs of early stage entrepreneurs. The gamut of offerings cover a wide range such as providing the competitive landscape for start-ups, valuation estimates, identifying appropriate investors, and hands on understanding of start-up fundraising.

Speaking on the importance of such an initiative, Dr. Tamaswati Ghosh, Chief Executive Officer, IIT Madras Incubation Cell, said that, "As one of India’s leading incubators with over 140 of deep-tech startups we are keenly aware of the challenges faced by early stage technology entrepreneurs, especially in raising investment and finding matched mentors. Services offered by YNOS are addressing some of these critical issues and I am confident that they will create a strong impact on the entrepreneurial ecosystem in this country."

Commenting on the relevance of the offerings, Arun Natarajan, Founder, Venture Intelligence and an investor in YNOS, said, “Start-ups that approach professional investors for the first time tend to be under prepared on various fronts. This tends to cause a lot of delay in fundraising - if not completely derail it. By aiming to provide actionable information on this front, YNOS is poised to play an important role in making Early Stage funding process in the country more efficient. ”

Dr. Rajan Srikanth, Managing Director, Smart Kapital and President, Keiretsu Forum, Chennai Chapter said, "There have been several efforts to help investors find startups, but very little done to help the entrepreneur find the right investor. This is a very tough problem because information is largely unavailable and even when it is, they are anecdotal and unreliable. As a result, identifying investors today is largely left to chance for the entrepreneur. The offerings of YNOS would not only lead to better matches of entrepreneurs and investors but also help the entrepreneur to understand the start-up landscape that can lead to better decisions. This will benefit the whole eco-system greatly."

R. Ramaraj, an active angel investor and Advisor, Elevar Equity, said that “Despite being most vibrant, navigating the entrepreneurial ecosystem continues to be a challenge for the early stage entrepreneurs in India. Starting with the competitive landscape and investor matching, the services and offerings of YNOS can significantly help young entrepreneurs in building their ventures. The offerings leverage insights from several years of research on Indian venture industry and use of data sciences tools and techniques."

Via - UNIIndia | Top Image - ForbesIndia.com

Startups in Chennai Survive More Than The Startups In Bengaluru & NCR

The percentage of start-ups failing in Chennai is lower than in Bengaluru and the national capital region (NCR), considered to be the hubs for start-ups. One of the primary reason for better survival rate of Chennai startups is due to the fact that investors in Chennai is conservative when it comes to choosing startups to fund as they deliberately bet on ideas.

According to Venture Intelligence data, the failure rate among start-ups in Chennai between 2010 and 2014 was one percent while the rates in Bengaluru and the NCR were six percent and seven percent, respectively.

Lakshmi Narayanan, vice-chairman of Cognizant, said the percentage of start-ups funded by the Chennai Angels Network surviving beyond three years was almost double of that of start-ups funded by angel networks in other Indian cities.



Arun Natarajan, founder, Venture Intelligence, said Chennai had higher resilience in the business-to-business (B2B) and software as a service (SaaS) businesses and that the city's start-ups had a clear focus on the business and revenue models. "Chennai does not follow the me-too concept," he said.

Bengaluru and the NCR have a head start in large enterprises and these cities have investor communities willing to experiment with new ideas. Investors in Chennai, on the other hand, are more conservative and bet on good ideas.

"It may be worth comparing five years hence how many ideas and enterprises have survived," Natarajan said.

2016-17 to be the year of acquisitions in startup industry

 



The financial year of 2016-17 seems to be the one where several startup entrepreneurs who have been longing to become the fodder for bigger companies, might see their wishes finally being granted.

According to data collected by Venture Intelligence for last fiscal year, 2015-16, the number of technology startups acquisitions and mergers more than doubled from just 69 in the year 2014-15 to 146 transactions in 2015-16.

Based on this last year's data, data analysts are predicting an even more jubilant time for the acquisition activity in the Indian startup industry in the year 2016-17. According to experts, this surge in numbers is mainly because of the trend that companies such as Snapdeal and Flipkart, which are better-funded and have been able to establish a dominance of sorts in the market, are looking to invest their money in some well-planned purchases.

The data collected also revealed that on- demand delivery startups have been a favourite among the investors in the first half of last year before facing a sad collapse in the latter part of 2015. But, according to industry experts, 2016 would be the year of the financial technology sector. The space could witness becoming a hotbed for companies scouting to grab their hands on a startup with a payments bank licence or an already well-renowned digital wallet.

Current industry trends predicts that some of the biggest internet companies in the country are currently waiting in line to take some young startups under their shrine.

Flipkart, India's most successful startup till date, recently bought PhonePe, a company currently in the midst of developing a product that will allow users to make payments using a mobile number, a concept which is almost based on the government-backed and currently launched Unified Payments Interface.

According to recent statements made by Binny Bansal, Flipkart's chief executive, this year the company will be scouting for investments and acquisitions in advertisement, payment, commerce and supply chain centric firms. Similar views were echoed by Kunal Bahl, Snapdeal's CEO regarding Snapdeal's acquisition plans for this year.

Experts believe that majority of acquisitions in this financial year, 2016-17, will be headed by investors who will be looking forward to extracting some marginal returns on their investment cycles near their ends, or as they start shrinking their portfolios. In fact, Entrepreneurs are also looking into exploring newer options in their effort to survive in a landscape that has been suffering through a bad phase of liquidity crunch the past ten months.