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Bengaluru had the highest rise in seed funding in the last three years among all the start-up ecosystems in the world, showed research from US-based Compass (formerly known as Startup Genome) in its ranking of start-up hubs released earlier this year.
A report released last week by software industry body Nasscom – prepared with the help of research firm Zinnov – showed that the trend has only accelerated this year. The report estimates tech start-up funding in India will cross $6.5 billion before year’s end, significantly higher than last year’s $5 billion, which included a billion dollar funding round for ecommerce behemoth Flipkart.
If only start-ups incorporated in the last five years are taken into account, the growth in funding is more than twice that of last year’s $2.2 billion. Extrapolating this from investments made in the first three quarters of 2015, start-ups incorporated from 2010 will receive nearly $5 billion this year.
But the steepest growth of all is in seed funding rounds, which is poised grow more than six times what it was last year – from $15 million to nearly $100 million. The average deal size in the seed round has also expanded from $200,000 last year to $700,000 in 2015.
The growing allure of young start-ups for investors is the clearest indicator of their belief that India has exciting prospects in tech. The Compass report, for example, showed that Boston, in contrast to Bengaluru, had stronger late stage funding, but a steady fall in seed rounds in the last three years, suggesting a future decline.
