Seed funding sextuples in India. Here’s why that’s exciting

Bangalore had the highest rise in seed funding in the last three years among all the startup ecosystems in the world, showed research from US-based Compass (formerly known as Startup Genome) in its ranking of startup hubs released earlier this year.

A report released last week by software industry body Nasscom – prepared with the help of research firm Zinnov – showed that the trend has only accelerated this year. The report estimates tech startup funding in India will cross US$6.5 billion before year’s end, significantly higher than last year’s US$5 billion, which included a billion dollar funding round for ecommerce behemoth Flipkart.

If only startups incorporated in the last five years are taken into account, the growth in funding is more than twice that of last year’s US$2.2 billion. Extrapolating this from investments made in the first three quarters of 2015, startups incorporated from 2010 will receive nearly US$5 billion this year.

But the steepest growth of all is in seed funding rounds, which is poised to grow more than six times what it was last year – from US$15 million to nearly US$100 million. The average deal size in the seed round has also expanded from US$200,000 last year to US$700,000 in 2015.

Early stage funding crosses billion dollar mark in 2015

Now, there’s further confirmation of the rush to fund young startups in India. Data from research firm Venture Intelligence shows that early stage funding in the seed, series A and series B rounds has crossed US$ 1 billion for the first time in India.

The growing allure of young startups for investors is the clearest indicator of their belief that India has exciting prospects in tech. The Compass report, for example, showed that Boston, in contrast to Bangalore, had stronger late stage funding, but a steady fall in seed rounds in the last three years, suggesting a future decline.

Compass also found Bangalore to be the most youthful startup hub among the top 20 ecosystems in its ranking. The Nasscom-Zinnov study also found that three out of four startup founders in India are below the age of 35. On the whole, data suggests it’s an exciting time to be starting up in India!

See: Here are the 7 most active investors in India

Is India the most exciting place to be for a tech startup now? Will investors stay bullish or will the market cool down? What do you think? Drop us a comment below.