Edtech, hyperlocal startups lead dealmaking in 2020: EY-IVCA

The year 2020 saw the rise of nine new unicorns in India, according to the India Trend Book 2021 released by management consulting firm Ernst &Young and The Indian Private Equity & Venture Capital Association’s (IVCA). 

The report said that investments in edtech and hyperlocal as a segment accounted for over 40% of the $8 billion invested across 400 deals in 2020. The $8 billion investment was made across private equity and venture capital deals, excluding the investments cornered by Reliance’s Jio Platform.  

Edtech in India has benefitted from the Covid-19 induced lockdown. The sector is expected to grow 3.7X in the next five years, from $2.8 billion in 2020 to $10.4 billion and over 37 million paid edtech users by 2025. 

The report also predicts the rise of direct-to-consumer models and omni-channel approach by retailers. 

Here are a few key takeaways form the report: 

• Over 75% of the private equity and venture capital deals over the past two years have been small-ticket investments, indicating an increase in early stage investments year-on-year. Of the 372 deals captured by the report for 2020, 297 deals were below $15 million capital 
• Startups in the edtech space raised over $2.2 billion in funding in 2020, with Byju’s accounting for $1.4 billion. The market size of edtech in India is estimated to grow from $2.8 billion in 2020 to $10.4 billion in 2025 
• Indian fintech companies raised $3.2 billion in equity funding for the year 2019-20 with fundraising slowing down after the spread of Covid. Fintech as a sector is expected to grow at a CAGR of 22.7% between 2020 to 2025 
• India's gaming industry is valued at US$930 million and ranked number one in the world, with an estimated 628 million gamers in India by 2021 
• B2C ecommerce in India is expected to reach $99 billion by 2024, growing at a CAGR of 27% from 2019-24. The growth will be led by grocery, fashion and apparel categories 
• Digital classified industry grew to Rs 173.8 billion in 2020, with the demand coming from tier 2 and 3 cities and growth in digital payments