Growth stage investments (Series B and C rounds) in Indian startups have set a record by raising a total of USD 1.17 billion in the first half of this year, Mint reported quoting data from startup data tracker Venture Intelligence.
This is the first time such investments are breaching the billion-dollar mark. Growth stage investments touched USD 994 million in the same period last year and USD 616 million in 2017.
The number of deals, meanwhile, has fallen from 85 last year to 76 this year, pointing to the fact that deal sizes have grown over the years. The average deal size has risen from USD 10.26 million in 2016 to USD 15.44 million this year so far.
“It’s a function of both the availability of capital and availability of companies that are ready to absorb growth capital," Prerna Bhutani, partner at early-stage investor India Quotient, told Mint.
Sequoia’s Surge, a dedicated fund for the seed stage, is a sign of the growing interest in this space. Venture growth firm Norwest Venture Partners is also planning to focus on the growth stage market.
Series C rounds have reached as much as USD 72 million this year. The entry of new investors focusing on growth stage deals alone has also contributed to this growth. Last year, at least three new funds — A91 Partners, a USD 350 million fund set up by three ex-managing directors at Sequoia Capital; Iron Pillar, a fund set up by ex-executive of Morgan Creek; and Mirae Asset Global Investments — have targeted this section exclusively.
Last month, two-wheeler rental startup Bounce raised funds led by US-based funds B Capital Group and Falcon Edge Capital. Media reports say Bounce’s rival Vogo and student housing startup Stanza Living are in talks to raise about USD 50 million in Series C and B rounds respectively.
Sameer Nath, managing partner, Iron Pillar, a USD 90 million fund told Mint that the quality of deals has improved in the mid-stage market in terms of founder experience, business model sustainability, time and ability to scale.
“A few venture growth specialists have followed Iron Pillar into the market but we are also observing global VCs, hedge funds and corporate VCs get more active, some of whom do not yet have a local presence," he said.
Other growth stage investors include Belgian firm Sofina, US-based Steadview Capital and Sands Capital, and Singapore’s Hillhouse Capital.