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USA Leading Investment Race in Indian Start-up Ecosystem
USA Leading Investment Race in Indian Start-up Ecosystem

July 29, 2021

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USA Leading Investment Race in Indian Start-up Ecosystem

Post the revision of FDI policy, many China and Hong-Kong based investors such as Alibaba Group, Morningside Ventures, Integrated Capital etc. have decreased their investment activity in India. However, limiting FDI from China and other neighbouring countries had a minute impact on the overall start-up investments in India. This gap has been replaced by funding from other global investors as well as increased funding activity of Indian investors and support from Government under the AtmaNirbhar Bharat Abhiyan.

Global investors participated in 44% of the start-up deals in 2020, amounting to ~86% of the total investments that went into Indian start-up ecosystem.

    1. US investors participated in 30% of the start-up deals in 2020, amounting ~60% of of the total investments that went into Indian start-up ecosystem.
    2. Of the investments which oversaw global investor’s participation, US investors were part of 75% of the deals, followed by Singapore based investors (15%) and Japanese Investors (10%). Other global investors include institutions from China, UK, UAE etc. 
    3. 20% of angel investment in Indian start-ups comes from US & Canada

Indian start-ups with USA as core market

  • 28% Indian start-ups serve global market
  • Out of these start-ups serving the global market, around 60% start-ups serve US and Canada as one of their markets
  • 30% start-ups serving US and Canada as market are leveraging deep-tech
  • SaaS based start-up generate ~75% of their revenue from exports majorly from US 
  • India already has 14 SaaS based unicorns till date: Browser Stack, Chargebee, Gupshup, Innovaccer, Glance, Tekion, Zenoti, Postman, Highradius, Icertis, Druva, Freshworks, Mu Sigma, InMobi

US Startups

 

US corporates eyeing Indian start-ups, 40+ deals and ~$1 bn. invested in 2020

Investments

  • 60+ Unique Corporates invested in start-ups during 2020. 24% of these corporates are based out of USA. For example: Google, Amazon, Siemens, Mastercard etc.
  • US corporate investors participated in 40+ deals during 2020 and had participation in ~$950 Mn of start-up investments.

Acquisitions

  • 10+ Unique Corporates acquired Indian startups in 2020. 3 of these corporates are globally based, of which 1 is based out of USA.

Open Innovation

  • 75+ unique corporates have active open innovation programs in India. Of these 40+ unique corporates are globally based

Merger & Acquisitions

  • Share of Acquisitions by Global players (out of total acquisitions) dropped from 37% in 2019 to 25% in 2020
  • 92% acquisitions by global players in 2020 done by global start-ups in contrast to 20% acquisitions by global start-ups in 2019.This is in line to trend observed on increased acquisitions by start-ups.

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