US Companies Most Active Foreign Investors in Indian Startups

By Little India Desk | September 3, 2017

US-based investors have been the most active foreign participants in India’s startup deals over the past five years.

With over 800 equity deals made by them during the period, investors from the United States have been the second most active grouping since 2012, after their counterparts based in India or Mauritius, according to CB Insights report released earlier this month.

CB Insights is a venture capital database that aggregates and analyses data contained in patents, venture capital financings, and startup and investor websites.

Singapore, Hong Kong, Japan and UK take up other places in the list of top five foreign investors in India’s technology ecosystem, getting five, three, two and one per cent of the deals, respectively.

“Excluding India and Mauritius, deal participation is heavily tilted toward investors from the United States, which has seen 800 disclosed equity deals to Indian startups since 2012 — more than four times the number of deals by investors from Singapore,” said the report, according to Business Standard.

Of these US-based investors, Tiger Global has backed some of India’s largest start-ups, such as Flipkart, Ola, and ShopClues. They have also made several other investments in smaller companies, and have been featured in the list of top 10 startup backers in the country.

Apart from Tiger Global, Japan-based Softbank is another investor in India’s startup scene, having pumped billions of dollars in the last few years.

Since 2012, Hong Kong-based Saif Partners, which has backed firms such as Paytm and Urban Ladder, has closed a large number of deals as well.

While India and Mauritius-based investors contribute to 61 per cent of the startup deals in the country, foreign investors have, in fact, pushed in larger amounts of money. US-based Accel Partners made its largest investment in Flipkart through the overseas unit rather than its lndia unit.

This is expected to see a push as the commerce ministry recently allowed convertible notes as a fundraising option for startups from foreign individuals into early-stage companies. The commerce ministry said that startups can raise up to 100 per cent funds from foreign venture capital investors by issuing equity, equity-linked instruments or debt instruments. This will ease raising venture capital funding from foreign entities.