Startups tide over Covid-induced economic slump

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Indian startup ecosystem is thriving even during Covid-induced economic slump, as the new-age businesses continue to attract investors. It wouldn’t be unfair to call 2021 as the year of startups.

Sample this: So far this year as many as 14 startups – including Cred, Groww, ShareChat and Urban Company among others – have already entered the prestigious unicorn club, despite severe wave of the Covid-19 infections. Last year, 11 startups – most of them from edtech and fintech space – had achieved the $1 billion valuation.

The acquisitions

Besides the increasing number of unicorns, a new trend seems to be picking up with startups acquiring decades old businesses. Sample this, Digital healthcare company Pharmeasy, which came into existance in 2014, has announced that it will acquire a controlling stake in diagnostic chain Thyrocare for Rs 4,546 crore. Thyrocare Technologies Limited, which came into existence in 1996, is a Navi Mumbai-based chain of diagnostic and preventive care laboratories.

Crisis hit PMC Bank, which came into existence in 1984, is another example. Centrum Financial Services and BharatPe, founded in 2018, have received in-principle approval from the Reserve

Bank of India to acquire crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank. BharatPe and Centrum Group were among four entities that had made the submissions to the RBI for the acquisition of PMC Bank in November 2020.

In April this year, ed-tech startup Byju’s – founded in 2011 – has acquired Aakash Educational Services Ltd (AESL) to bolster its presence in the test preparation segment in the country. Reportedly, the deal is worth close to $1 billion – making it the biggest acquisition by Byju’s to date. Aakash Educational Services came into business in 1998.

Rising funding

Reportedly, the average funding size has increased to $25.21 million so far in 2021, up from $14.94 million in 2020 and $18.41 million in 2019.

Startups raised total investments of $7.8 billion in the first four months of the present calendar year, which is nearly 70% of the overall corpus of $12.1 billion raised in entire 2020 and more than 50% of $14.2 billion raised in 2019, data from US-based research firm PitchBook shows.