Venture capital market in India ends 2019 on a high note: KPMG

Venture capital investment in India was quite strong in the fourth quarter of calendar 2019 (October to December), ending the year on a high note with a number of large mega-deals, according to the latest Venture Pulse report released on Wednesday by KPMG in India.

The mega-deals included a one billion dollar funding round by PayTM and a 500 million dollars round by business productivity company Udaan.

Consumer-focused technologies were a critical focus for VC investors in India, said the report. In addition to PayTM, online pharmacy company PharmEasy raised 220 million dollars while home furnishings company Urban Ladder raised 148 million dollars.

 

Fintech continued to be one of India's strongest sectors of VC investment in Q4 CY19, a trend expected to continue for the foreseeable future given the country's significant rural and unbanked population and the complexities and challenges associated with building a traditional financial services company in the country.

Foreign investors remained quite active and interested in making investments in India. During Q4 CY19, Silicon Valley-based Accel closed funding for a 550 million dollar fund, its sixth India-focused VC fund.

India has also seen an increase in VC investments by Japan's trading houses, said the report.

"While VC investment started off soft, the last two quarters have seen a number of excellent deals," said Nitish Poddar, Partner and National Leader for Private Equity at KPMG in India.

"This activity is very encouraging and suggests a growing positivity heading into Q1 CY20. Further, of late, there is a growing interest in the space from Japan's trading houses, who are betting on the India consumption story."

Heading into 2020, said the report, companies in India looking to attract attention from VC investors are expected to put more emphasis on reducing their cash flow and providing clear paths to profitability.

Investors are likely to focus their investments on companies with strong and sustainable growth models. Logistics, education and e-commerce are all expected to remain hot areas of growth.