VC investments in India dipped to $2.2 billion in the first three months of 2020, and experts see a grim future

• According to a KPMG report, VC investments in India dipped to $2.2 billion in the first quarter of 2020.
• In the last three months of 2019, the number was as high as $6 billion.
• India’s VC deals were affected as a significant amount of investments in the country come from international VC firms and corporates.

In the wake of the coronavirus pandemic, businesses around the world have been impacted. Investments have halted as businesses went into a ‘wait and watch’ mode. But the impact of coronavirus in India began even before the lockdown was put in place.

According to a KPMG report, VC investments in India dipped to $2.2 billion in the first quarter of 2020. In the last three months of 2019, the number was as high as $6 billion.

But with the coronavirus panic only growing in India and the number of cases rising despite a lockdown, the future seems grim for VC investments.

“VC investors are already starting to ask the question, ‘How will your business be impacted by COVID-19?’ This is a question everyone will be asking for the next few quarters. Here in India, we are beginning to feel the full impact of the virus. Over the next quarter, while the pipeline will likely remain strong, deal flow is expected to slow down. A lot of deals will probably get deferred to the later half of the year,” said Nitish Poddar, partner and national leader - Private Equity, KPMG in India in a statement.

India’s VC deals were affected as a significant amount of investments in the country come from international VC firms and corporates.

Sectors to watch out for

In the first three months of 2020, edtech emerged as the clear winner as investors pinned hope on the sector that is seeing growth and transformation. Some of the biggest investments were unicorn startup Byju’s raising $400 million, Unacademy getting a $110 million cheque, and Aakash Educational’s acquisition of Meritnation.

All edtech startups have opened up their courses and classes for free and have already seen a surge in the number of users. In March alone, Byju’s saw 6 million new students on its platform, while Unacademy crossed one billion minutes of watchtime of its content on its platform and across its YouTube channels in the month of March 2020.

In addition to edtech, sectors like gaming, autotech, healthtech especially fitness could witness an uptick in investments, says the KPMG report.

Because of the lockdown, the gaming sector has already seen a massive jump in the number of players. Paytm First Games expects it to cross 10 lakh in coming weeks, while Winzo has seen concurrent users increasing by 30%-40% day on day and the paid conversions have increased by 20% on the platform.

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