We have seen investments into Indian tech startups on an upswing recently, topping US$1.3 billion in FY2013-14 and accounting for 266 deals. We’re getting close to a deal a day. In fact, the first quarter of 2014 had a multi-year high of $427 million. While ecommerce took the lion’s share, online travel and educational tech also attracted increasing interest from investors.
This is a continuation of a trend over the past five years. Between 2010 and 2013, more than US$3 billion flowed into India, which compares well with US$1.5 billion invested in Startup Nation Israel in the same period. This despite the fact that the Indian startup ecosystem is still not mature enough for big ticket exits, and over four-fifths of investment deals are early-stage.
So who are these early bird investors making big bets on Indian innovation? Who are the optimistic ones you should probably go to first if you’re a startup looking for funding in India?
Silicon Valley-based 500 Startups tops the list. It was the most active institutional investor in the Indian tech startup scene in 2013-14, making over 20 investments during the year, according to research firm CB Insights. Mumbai-based Blume Ventures was second, while Accel Partners rounds out the top three.
Four out of the top 10 ranked investors are based in India — Blume Ventures, Kalaari Capital, IDG Ventures India, and Kae Capital. The others have their headquarters abroad, but most of them have a presence in India to keep track of emerging startups as well as their investments.
Here’s a rundown of the top 10 institutional investors who have been the most active in the Indian tech startup scene recently:
Dave McClure’s popular Silicon Valley based seed fund has been bullish on India, with a country-specific fund called 500 Wallah. It made as many as 20 investments in FY2013-14, into companies like price comparison site PriceBaba and language learning innovator CultureAlley. And it currently has three startups from India in the ninth batch of its accelerator program.
This Mumbai-based homegrown venture capital firm likes to take a collaborative approach to investing, roping in other investors and angels into the ventures it backs. Blumers they call themselves, but they have a number of successes under their belt. Cool startups like cab aggregator TaxiForSure and robot-maker Grey Orange are in the Blume basket.
Investments in ecommerce biggie Flipkart and Myntra’s series E, as well as BabyOye’s US$12 million series B and real estate portal CommonFloor’s series C and D rounds, among others, made Accel Partners one of the movers and shakers in India in the last four quarters. Freshdesk and BookMyShow are among the many Indian stars this California-headquartered firm has backed.
Technopreneur-turned-investor Vani Kola, who returned to India after a billion-dollar exit from Silicon Valley, is the managing director of this Bangalore-based venture capital firm which took a punt on Snapdeal and Myntra long before the ecommerce boom. Kalaari, which derives its name from a martial arts tradition in South India, continues to pick winners like Urban Ladder and Zivame.
Tiger Global Management
This ‘Tiger Cub’ from New York has funded some of the tech pioneers in India like Flipkart, MakeMyTrip and JustDial. In fact, it was one of the early players in the Indian tech startup scene, before unexpectedly shutting shop in 2009, ostensibly because it did not find the scale it was looking for. But it has been back with a bang since 2011.
Nexus Venture Partners
With offices in Silicon Valley and Bangalore, this venture capital firm started by a bunch of Indian entrepreneurs is well-positioned to spot emerging talent and innovation. A number of cloud-based solutions have caught its fancy, but the big play was in ecommerce site Snapdeal – clearly seeing value in the online marketplace model.
IDG Ventures India
IDG Ventures from San Francisco is one of the biggest investors in Asia, with funds in China, Korea, and Vietnam, apart from India. Major investments this year by IDG Ventures India have included business process management provider Newgen, tablet-based education provider iProf, online ophthalmic health provider Forus, and babycare product etailer FirstCry.
Helion Venture Partners
This is a US$600 million India-focused fund based in Mauritius. Eye-Q and Denty‘s, bringing eyecare and dentistry online for Indian consumers, illustrate the kind of consumer-facing internet-driven ventures that Helion likes to back. Real estate portal Housing.com has also been a big beneficiary.
Here is another homegrown venture capital firm, like Blume and Kalaari, actively investing in Indian tech startups. Its founder Sasha Mirchandani was the managing director for India of US-based BlueRun Ventures, before striking out with his own firm. Little Eye Labs, the first Indian company to be acquired by Facebook, was one of its investments.
Intel inside India has a nice ring to it, and that’s what it is proving to be, as the global chip-maker’s venture capital arm develops a growing appetite for tech plays out of India. Recent evidence of this came when it led a US$16 million round of funding in hot data analytics firm Vizury. A preference for hardware startups like high-end modem-maker Saankhya Labs is in its DNA.
It’s worth pointing out again, this is a ranking of investors who were the most active in the last financial year. Others like Sequoia Capital, Inventus Capital Partners, SAIF Partners, GSF Global, and VentureEast may not have been that active just recently but have many great Indian startups in their portfolio already. Sequoia is also sitting on a new US$500 million plus fund for India – so we can expect some smart moves soon.
And we haven’t looked at the angel investors yet – the ones who put their money down even before a product or service gains traction. So stay tuned for the second part of this article.