PE/VC sees 65% year-on-year drop in April 2020

Chennai: In an indication of tightening monetary chains, private equity and venture capital funds fell 65% yoy, worth, in April 2020, to $ 931 million from $ 2.7 billion a year ago. Venture capital financing alone was $ 487 million, a year-over-year drop of $ 614 million. Investments were made in 67 agreements with a decrease of 91 agreements in the same period, the previous year.

Cautious investors are betting on sectors that currently have assured returns. Most of the investment went to fintech, edtech, healthtech and e-commerce. Major offerings include investing in SP Infra, DMI Finance from private equity players, while VCs opted for e-grocery delivery and healthcare tech firms BigBasket, MedGenome respectively, which saw a jump in business during the blockade led by Covid. Edtech companies like Byjus and Vedantu also saw the money pool. Another clear emerging trend is the rounds of bridges: portfolio companies that raise funds from existing investors. BigBasket saw $ 60 million from Alibaba join in and the beer brand Bira brought in $ 30 million from existing investor Sequoia. Other rounds of bridges include BankBazaar securing money from Amazon.

Funding figures also show a monthly decline in investor interest. The total investment made is also lower than the March 2020 figures, in which VC and PE spent $ 1 billion. Financing in family sectors also experienced a jump.

Dr. Arun Natarajan, Venture Intelligence, said the numbers indicate that these deals are in place for existing startups at a late stage in a round of bridges. “This is only fulfilling a previous commitment from investors. The entire investment process takes over 3 months and investors are cutting checks for older deals. Investments will decrease further in May and we can also see some investors coming back to their deals, ”said Natarajan.