The Strength of Venture Capital Deals in India – July 2014

by Emily Forbes

  • 09 Jul 2014
  • PE
  • VC

Since 2007, India and China combined have accounted for at least 75% of deals each year that occur in Asia. The proportion of the number of deals that India accounted for from 2007 to 2011 ranged from 24% to 27%. However, from 2012 this proportion increased significantly to a range of 39-42%. Conversely, the market share that Chinese financings accounted for from 2007 to 2011 ranged from 61% to 65%, and from 2012, the proportion that venture capital investments in China represented decreased to a range of 35-41%. The number of deals that occurred in India has increased each year from 105 in 2009 to 337 in 2013.

Preqin’s Venture Deals Analyst product shows that there have been 1,574 deals in India since 2007, with an aggregate value of $10.6bn. The number of deals that occurred stood at 161 in H1 2013 and increased slightly to 169 in H1 2014. However, the aggregate deal value increased by 125%, from $577mn in the first half of last year to $1.3bn in the first six months of this year. This is due to several large financings occurring in 2014 YTD, the largest of which was the investments in Flipkart, which raised $210mn in May, making it the third largest venture capital round in India since 2007. Just prior to this funding, Flipkart acquired Myntra for $100mn, another internet company that had raised $50mn in January, the fifth biggest Indian deal so far this year. Snapdeal also raised a considerable amount of funding, initially receiving $133.77mn in February 2014, then another $100mn three months later in May.

The five largest deals in India in 2014 all occurred in the internet industry. In total, there have been 63 internet deals in India in 2014 YTD, with an aggregate deal value of $925mn. They accounted for 35% of all venture capital financings in the country in 2014 YTD, compared to 38% that they accounted for in 2013. The aggregate deal value however has increased by 26 percentage points, from 40% of the Indian venture capital market to 66% from 2013 to 2014YTD.

The number of deals in the business services industry in India has decreased by six percentage points since last year. The aggregate deal value has also decreased by eight percentage points, falling from 12% to 4%. In contrast, the telecoms industry witnessed an increase in the proportion of number of deals and aggregate value that the sector accounted for from 6% to 12% and from 3% to 8% respectively. The healthcare and software industries both have a fairly high proportion of deals in 2014 YTD compared to other sectors (10% and 13% respectively), however the aggregate deal values are lower at 5% and 3% respectively.

The proportion that  the number  of angel/seed rounds in India account for as a percentage of all Indian deals has increased by 19 percentage points since 2007, from 9% in 2007 to 28% in 2014 YTD, however, the aggregate value that such deals contribute to the total value of Indian venture capital financings decreased from 3% in 2007 to 1% in 2014 YTD. The market share that series A rounds account for decreased between 2007 and 2013, from 21% to 9% respectively. The proportions in regards to the aggregate deal value of Series A financings follow the same pattern, decreasing by 19 percentage points from 23% in 2007 to just 4% in 2013.

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