Ecosystem harkat: Late-stage equity, circular economy, entrepreneurs in media, medical & space

The Tech Panda takes a look at the investment temperament in the Indian startup ecosystem.

India is on the track to become the world’s third-largest economy, under the vision to make it Atma Nirbhar. Investment initiatives act as a launch pad to India’s high economic growth that is inclusive and sustainable.

In the PM’s post-budget speech, 2023, PM Narendra Modi emphasised on making the circular economy a major tool for urban development. The global opportunity for the Circular Economy is expected to touch US$4.5 trillion by 2030. Adopting Circular Economy practices in India can help generate savings of over US$624 billion by 2050 across food and agriculture, construction, and mobility.

As per Tracxn’s India Tech Semi-Annual Funding Report H1 2024, Indian tech startups raised US$4.1 billion in H1 2024, a 4% increase from $3.96 billion in H2 2023. Though there was a 13% decrease compared to $4.8 billion raised in H1 2023, India still remains the fourth-highest funded country globally in the tech startup landscape.

Neha Singh, Co-Founder, Tracxn, said, “Despite four consecutive half-year periods of declining funding since H1 2022, we are now showing signs of stabilization, going upward. India’s robust performance as the fourth-highest funded country in the tech startup ecosystem is encouraging. From emerging developments in Retail and Enterprise Applications to pioneering advancements in fintech, Indian startups are transforming industries and driving economic growth.”

The funding landscape across different stages showcased varied trends: Seed-stage funding increased to $455 million, up by 6.5% from H2 2023 but down 17.3% from H1 2023. Early-stage startups maintained a steady funding amount of $1.3 billion, consistent with H2 2023 but 28% lower than H1 2023. Late-stage funding rose to $2.4 billion, marking a 3.8% increase from H2 2023, although it saw a slight 1.3% drop compared to H1 2023.

Despite these challenges, the first half of 2024 witnessed 8 funding rounds surpassing $100 million such as Flipkart’s $350 million Series J round led by Google, Apollo 24|7’s $297 million PE round, and Meesho’s $275 million Series F round. 

The leading sectors in terms of performance in H1 2024 were Retail, Enterprise Applications, and FinTech. Funding in the Retail sector increased by 32%, reaching $1.63 billion in H1 2024 compared to $1.23 billion in H1 2023. The Enterprise Application sector raised $933 million in H1 2024, a 10% decrease from the $1.04 billion raised in H1 2023. In the FinTech space, funding dropped by 50%, from $1.45 billion in H1 2023 to $726 million in H1 2024.

In H1 2024, 3 unicorns emerged, a notable rise from none in H1 2023, alongside 33 new additions to the Soonicorn club. The number of IPOs also rose to 17 in H1 2024, from 6 in H1 2023 and 12 in H2 2023. Some of the top companies that went public were TBO, TGIF Agribusiness, Radiowalla and Trust Systems & S/w.

Acquisitions in the Indian startup ecosystem saw a decline, with 43 acquisitions in H1 2024, compared to 75 acquisitions in H1 2023. Notable acquisitions included PingSafe, being acquired by SentinelOne for $100M, marking the highest valued acquisition in H1 2024, followed by PureSoftware acquired by Happiest Minds for $94.5M. 

Bangalore emerged as the leader in total funds raised during this period, followed by Delhi and Mumbai. The overall top investors in H1 2024 were Accel, Blume Ventures and Peak XV Partners. In the seed stage, Venture Catalyst, Z Nation Lab and We Founder Circle were the top investors. Peak XV Partners, Alpha Wave Global and Saama Capital are the most active early stage investors in H1 2024. DST Global, Epiq Capital Advisors and UC-RNT Fund are the leading investors actively involved in late-stage investments in H1 2024. 

New vertical to fuel growth of circular economy startups

In July, India Accelerator launched a new thesis – Circular economy, dedicated to boost the growth of potential startups in the segment. The vertical aims to support startups that are closely looped into sustainability business models, waste reduction, energy efficiency and climate change.

Based on a strategic approach, IA’s new thesis will be India’s only dedicated accelerator program to back the burgeoning growth of the circular economy. The vertical provides an extensive growth framework for clean energy, e-waste recycling, lithium-ion battery manufacturing, biotechnology, and decentralized water treatment startups. As part of the launch, IA plans to allocate Rs 1.5 crore per startup through Finvolve Accelerator Fund to scale startup operations and $500K per startup through Finvolve Seed Fund to support growing startups poised for expansion.

Deepak Nagpal – Managing Partner, India Accelerator said, “The Circular Economy opportunity is inevitable amid a widening demand supply gap and excessive dependence on imports to meet energy requirements. India’s leadership in technology and innovation creates an opportunity to accelerate its transition towards the Circular Economy, especially in light of greater cultural acceptance towards circular practices. With our recent endeavour, we aim to promote responsible consumption and production and fuel the growth of these startups.”

Ashish Bhatia – Founder & CEO of India Accelerator said, “The future of economic growth lies in sustainable practices and circular economy principles. However, this transition requires extensive planning at the macro level. With the new thesis, we aim to bring together the startups and key stakeholders onboard to redefine resource use and focus on building a regenerative future.”

As part of the inception of the Circular Economy thesis, IA has already invested in sustainability startups including eMines, Bonphul, Trashnet and Recycle Green. These startups have built advanced biofuels and green technology solutions, robust e-waste recycling systems, decentralized water treatment systems, plant-based leather and bio-material solutions.

By January 2024, IA had 225 startups in its cohorts, while two-thirds of them successfully raised follow-on funding. It has exited nearly one-third of these startups and made healthy returns on investments in the past six years.

Apart from this, IA has dedicated verticals to focus on the growth of startups in different niches including – RUMS for Robotics and Unmanned Systems, Energy & Mobility, Generative AI and Media Entertainment & Gaming. The move to set up Circular Economy as a new focus further becomes the growth impetus for circular economy startups, providing a collaborative growth ecosystem, funding opportunities and resource access for market acquisition and scaling process.

Late-stage Equity Continuum fund of INR 300cr

In July, Anicut Capital, a premier Multi-Asset Alternative Investment firm, closed its maiden late-stage Equity Continuum fund of INR 300 crore. This fund is strategically designed to support high-potential companies preparing for an IPO within the next 2-4 years. With this closure, Anicut Capital’s total assets under management (AUM) have surpassed INR 3,000 crore across all its funds.

After a rigorous and meticulous selection process, the fund will invest in a carefully curated list of 5-6 companies that have demonstrated significant scalability, profitability, and IPO readiness. These companies, selected from within the Anicut ecosystem, have had long-standing relationships with Anicut Capital, spanning over five years.

“We are excited about the successful closure of the INR 300 crore Anicut Equity Continuum Fund (INR 200 crore + INR 100 crore green-shoe option) and the strong investor interest it has attracted. This fund highlights our commitment to supporting businesses at various stages of growth and our belief in India’s vibrant entrepreneurial ecosystem. The swift closure within eight weeks, bolstered by a substantial INR 60 crore investment from HDFC AMC, underscores strong investor confidence,” said Ashvin Chaddha, Managing Partner and Co-founder, Anicut Capital.

An accelerator program to cultivate & empower aspiring entrepreneurs in the media sector

Graphisads Limited, an advertising company and outdoor media owner, has tied up with the Indian Institute of Management (IIM) Lucknow to unveil “G Force,” an innovative accelerator program. This initiative aims to cultivate and empower aspiring entrepreneurs within the Media sectors through a dynamic collaboration of industry expertise and academic leadership.

The tie up marks a significant milestone in the industry, bridging the gap between the advertising world and a renowned academic institution to foster innovation and entrepreneurship.

Mukesh Gupta, CMD of Graphisads, expressed his enthusiasm, stating, ” With our robust media presence, client relationships, and extensive network, we are poised to create numerous success stories with around ?100 Crore in coming 3 years.”

Arunodaya Bajpai, COO of IIM Lucknow Enterprise Incubation Center, added, “With the industry rapidly approaching Rs. One lakh crore, coupled with ongoing disruptions, it holds immense growth potential. Our focus spans key sub-sectors including Gamification, event automation, influencer marketing, adtech, DOOH platforms, Programmatic Media Opportunities, and mar-tech. Through personalized guidance, we aim to equip startups for market readiness.”

Deep tech VC announces partial exit from Medtech startup with 6X returns

In July, Unicorn India Ventures, a deep tech focused fund house, which is currently raising its third fund of Rs 1,000 crore, announced a partial exit from neo diagnostics startups Sascan Meditech. UIV had invested Rs 2 crore spread across 2 rounds. The first investment was made in 2020.

The partial exit from Sascan has generated 6X returns for the Fund as UIV continues to hold a substantial stake in the company. Thiruvananthapuram-based Sascan Meditech is an emerging healthcare innovation company founded in 2015 by Dr Subhash Narayanan, a laser scientist with interest in the development of Biophotonics products.

Anil Joshi, Managing Partner, Unicorn India Ventures, says, “As a fund, we have continued to demonstrate our focus on backing deep tech business models, our thesis of going beyond the metros to find real innovative solutions with commercial acumen has built a strong track record for our fund.”

Unicorn India Ventures has invested in the company in 2020 and was the first only institutional investor. The Fund invested in Sascan again in 2021.

IN?SPACe releases AO for making available Indian Orbital Resources to the Non-Government Entities

In August, the Indian National Space Promotion and Authorization Centre (IN?SPACe) released an Announcement of Opportunity for making available Indian Orbital Resources to the Non-Government Entities (AO). Through this AO, Indian ITU Filing at 89E, which is in coordination stage, will be made available to one selected applicant.

Dr. Pawan Goenka, Chairman, IN-SPACe said, “This Announcement of Opportunity is a game-changing opportunity for NGEs to participate in the global space economy and establish a world-class communication satellite system. This initiative underscores the Government of India’s commitment to empower talented Indian NGEs with the resources and support they need to succeed and contribute to India’s journey to leadership in the global space economy.”

This AO aims to identify an applicant with Indian management & control and having the requisite technical and financial capabilities to own, establish and operate a GSO satellite at 89E for providing communication services.

The last date for submission of the application is September 15, 2024. The AO document can be viewed and downloaded from IN-SPACe digital platform (www.inspace.gov.in) for making the application to IN-SPACe.