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VC investment in India is expected to be buoyant throughout the year: KPMG

T E Narasimhan/Chennai 15 Apr 19 | 10:58 PM

Venture capital (VC) investment in the country grew in the March quarter from December, with automotive services leading the trend. This was in contrast to global VC investment, which saw a decline from the record height in the December quarter.

VC investment in India is expected to be hot through the end of the year, though investors might be a little cautious for the second quarter of 2019, owing to the general election, according to a report from consultancy KPMG.

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The March quarter saw, among other things, $413 million (Rs 2,860 crore) in capital raising by supply chain entity Delhivery and a $300-million (Rs 2,100 crore) raise by ride-hailing platform Ola. Delhivery joined the unicorn club (valuation over $1 billion) during the period, along with Australia-based Airwallex, France-based Doctolib and Germanys N26.

"The country attracted several $100 million-plus deals in the quarter," went the report, led by the Delhivery round, which was led by the SoftBank Vision Fund. SoftBank was particularly active in India in the quarter, also making a $60-mn investment in online grocery company Grofers and a $149-mn one in baby clothing e-tailer FirstCry.

Automotive service companies were a big hit with investors, led by the Ola funding of $300 million from Kia and Hyundai (both of Korea) as part of a plan to develop electric vehicles. Automobile marketplace platforms also continued to receive attention, a trend expected to continue for several quarters. A car trading platform, CarDekho, raised $110 million in a Series-A round. 

The caution mentioned as likely earlier in the June quarter is expected to be temporary, it says, with a number of investment areas expected to be hot through the year, including automotive trading platforms.

VC investment in educational technology is also expected to see substantial growth. "EdTech has the potential to become a truly breakout sector. It has evolved from companies simply offering online digital classes, to providing access to both online and offline tutorial offerings, to now offering even more innovative options. With no clear leader in the space, many companies are competing to develop content and raise funding rounds. It is anyone's game, which will make the next few quarters critical," said Nitish Poddar, partner at consultancy KPMG.

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