Flipkart, Jio deals push venture capitalists inflows to $3.6 billion in Sept quarter: Report

Mumbai: Despite the pandemic-driven recession, venture capitalists continued to invest dollars into the country with September quarter seeing investment inflows more than doubling to USD 3.6 billion over April-June, says a report. In June quarter, which was marked by very strict nationwide lockdown, VC inflows stood at USD 1.5 billion, according to the data collated by KPMG, which also feels that the ongoing quarter will see more fund inflows.

But on annualized basis, the inflow has been tepid with only around USD 500 million of additional inflows into the country, shows the report.

Of the total USD 3.6 billion inflows, as much as USD 1.3 billion came into Flipkart from Walmart, which had bought out the former for USD 17 billion in August 2017. According to Nitish Poddar, a partner at KPMG India, the clear standout sector for VC investment here has been edutech. This has been true for the past couple of quarters as well, but this quarter, the list of deals just goes on and on.

Amarjeet Singh, another partner at the advisory firm, said the country continues to be an attractive market for VCs. With the impact of the pandemic and the new normal paving the way for disruption in business models, there is significant demand in the edutech, health tech and fintech segments. Funding is likely to rise further in December quarter and investments are expected to pick up substantially again by the end of the year.

Despite the very challenging economic conditions due to the pandemic, VC inflows into the country rose in the September quarter (Q3). After steadily rising throughout 2019, the country saw a record quarter to close off the year. The current year has been a mixed bag, although September quarter saw two large deals close in the top 10 biggest funding rounds in the quarter -- USD 1.3 billion infusion in Flipkart and Byju's USD 500 million late-stage funding.

Also, large tech giants continued to be very active in the country during the quarter. In July, Google announced a USD 10 billion funds to help accelerate the country's transition to a digital economy. Google has also agreed to make an additional USD 4.5 billion investment into Jio Platforms, following on Facebook's USD 5.7 billion investment in June quarter. Globally, VC investment touched USD 73.2 billion in the third quarter across 4,861 deals and was led by booming pharma and biotech sector attracting USD 31 billion so far in the year. In the same period last year, it was USD 70 billion.