Indian start-up investments have hit a two-year high. The initial three months of 2021 saw capital flow of $4.2 billion, data from Venture Intelligence shows. This is 40% higher than that in the first quarter of 2020, when it was $3.5 billion. It even surpassed the investment of $4.1 billion in the December quarter of 2019. The most recent quarter figure is nearly 45% higher compared to that in the December quarter of 2020 ($2.9 billion). Indian start-ups are arising firmly strongly from the Covid-19 induced slump in the middle of last year.
 
Start-up investments had come to a near halt in the June quarter last year. The most recent quarter's figure was last matched in the September quarter of 2018.

Industry executives involved in these investments stated this is also a ripple effect of the increased global liquidity with investors to make investments in technology Company in emerging markets.

“There is a lot of appetite among the investors to put money in India and in local start-ups. People who were sitting on the sidelines are also ready with cheques (of large size). Companies that would have raised $50-$100 million are now raising $100-$300 million,” stated Mohan Kumar, founder and managing partner at software-focused Avatar Ventures. He added that global investors are looking for new investment avenues, beyond the expensive BigTech shares like Amazon and Apple.

“Globally, a lot of limited partners or LP (who invest in venture capital funds) and other origins of funds have seen low-cost capital flowing into funds. So, the LPs have been telling fund partners to go aggressive in both public and private bets in the tech space. In the private tech sector in India, it’s now clear to people that tech and the new economy are the places to bet,” a senior investment banker added.

As per him, public market investors are also increasingly looking at internet startups, citing recent investments in companies like Zomato and Byju’s.

The investments are also happening at a higher valuation than before, leading to certain startups attaining the unicorn status (start-ups valued at $1 billion or more) sooner than expected. “Valuations have gone high definitely but it’s also happening in early-to-mid stage start-ups. Having stated that, the quality of startups has also improved,” another venture capital investor added. So far, India has seen four unicorns this year officially, but multiple other start-ups are expected to enter the coveted club in the upcoming quarter.