KPMG: Indian VC Investment Surges in Q2

Direct-to-consumer companies will benefit from increased VC investment—particularly those with strong digital operating models

Starting in the third quarter of 2020, India’s venture capital deals have steadily risen to US$8bn in Q2. According to global professional services firm KPMG, all different kinds of companies will benefit—especially those directly serving consumers. In fact, from e-commerce to local grocery delivery, VC firms are investing in businesses that go digital. 

‘This opens a new avenue for early-, mid-, and late-stage financial sponsors to cash in on their investments’, said Nitish Poddar, Partner and National Leader for Private Equity at KPMG. ‘This will only increase their attractiveness’. 

Which Companies Will Benefit? 

Those that integrate digital business models into their operations. As customers rushed online to buy household items, groceries, and consumer tech during 2020 and 2021, investors took note. One business model that’s gaining more interest is edtech, fueled by colleges and universities shifting online during the pandemic. BYJU, which helps kids learn coding through its FutureSchool, raised US$1.5bn this quarter. 

Said Anand Vermani, Partner and Co-Head for KPMG Corporate Finance: ‘The advent of so-called traditional funds into this segment lends a strong vote of confidence and validation to operating models of new-age businesses’.

The Global Picture

Global VC investment rose from US$147.2bn in the first quarter of 2021 to US$157.1bn in the second. In Europe alone, it increased from US$23.9bn in Q1 to US$34bn in Q2, while corporations invested a total of US$73.9bn. What does this mean? Overall, investors have enough funds and motivation to continue investing in digital startups and established businesses that take some lessons from their agile counterparts. 

Even as countries and economies slowly recover from the pandemic, the last year has changed some global habits for good. When brick-and-mortar stores re-open, they’ll be using more omnichannel strategies, in which customers still have the option to buy online. So keep your eye on Q3 and Q4 in the Indian VC market. Though the urgency of the pandemic is in part driving VC digital investment, this trend is set to spread.


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