Venture Capital Investment Trends 2020 & 2021

May 4, 2023

2020 was an extraordinary year for India, due to the impact of COVID-19 on the economy and healthcare systems in India. It also played an important role in accelerating and/or driving certain digital and technological trends that were before thought to be years away. This dramatic acceleration and adoption is reflected in the startups that have come up and the VC investment trends since last year.

Investment Landscape Key Highlights

  • Smaller average deal size in 2020
  • Total deal value declined to $10.1B in 2020 from $11.1B in 2019
  • Deal volume grew by 7%
  • ~810 VC deals in 2020 vs. ~755 in 2019
  • Significant growth in small value deals (~500 deals of <$5M vs. ~390 in 2019)
  • No. of active VCs in India reached ~520 in 2020
  • VC fundraising for India-focused funds reached the highest levels ever in 2020—$3B (growing by more than 40% over 2019)
  • Consumer Tech startups, Fintech startups and SaaS startups continued to lead as key sectors of investment, accounting for 75% of the VC investments in 2020 vs. 65% in 2019; Consumer Tech accounting for the majority of it
  • VC exits declined to $1.3 billion in 2020 from  $4.4 billion in 2019 – 1/3rd of the exit value came from EdTech, ~1/5th from food tech
  • The exit outlook remains positive for the next few years as most of the top VC funds’ portfolio is yet to reach maturity.

Key investment Trends in 2020

2020 saw Consumer Tech, SaaS and FinTech continue to lead as key sectors of investment, with the three sectors accounting for 75% of the VC investments in 2020 vs. 65% in 2019 and Consumer Tech accounting for the majority of that 75%. SaaS, in particular, has shown clear signs of maturity, with the average deal size increasing dramatically to $25M in 2020 from $14M in 2019. Key sub-sectors in each of these sectors include:

  1. Consumer Tech – Edtech, FoodTech, Gaming, Media & Entertainment, HealthTech
  2. SaaS – Verticalized solutions
  3. FinTech – Payments, Lending, InsurTech, Wealth Management

Investments themes that continued from prior years into 2020

  • Strong deal flow: close to $10B in VC investments
  • The continued impetus in Consumer Tech, SaaS
  • $3B funds raised by India focused funds in 2020, 40% higher than 2019
  • ~7000 new startups were founded in 2020, and 12 new unicorns added

Investment themes accelerated or driven by COVID-19 in 2020

  • Decline in average deal size by 15% from 2019
  • Investment activity increased in select sectors in Consumer Tech, with an average 4x increase in investment value over 2019
  • 70% lower exit value in 2020 vs.  2019

Sector-wise investment highlights

In 2020, the top three sectors – Consumer Tech, SaaS and FinTech – accounted for 75% of all VC investments, with Consumer Tech attracting the maximum funding.

In Consumer Tech, the investments grew 25% over 2019, and certain sectors saw massive increase in investments, such as EdTech (6.1x), FoodTech (4.1x), Gaming (2.7x), and Media & Entertainment (2.4x), accelerated by the pandemic. SaaS accounted for the second highest quantum of investments after Consumer Tech.

FinTech’s investments grew slightly from $1.1B in 2019 to 1.2B in 2020, and payments was the most sought after segment. Investments in Lending and InsurTech sectors increased by 4% and 6% respectively. The FinTech sector has especially seen several large deals getting closed in these three sectors.

Trends across Consumer Tech sub-sectors:

Sub-sectorTop TrendsNotable startups
EdTechOnline tutorials/test prep, Executive education platformsByju’s, Unacademy, Eruditus
FoodTechCloud kitchens, Online food deliveryZomato, Swiggy, Faasos, FreshToHome
GamingNon – Fantasy sports (during COVID)Dream11, MPL
Media & EntertainmentShort video social networking apps, News & Infotainment appsDailyhunt,, Inshorts, Josh, Public
HealthTechWellness, Online consultation, Digital therapeutics; E-pharmacies (limited), Practo, DocsApp, Biofourmis,
Verticalized E-CommerceBaby merchandise, Home décor and furniture, Used cars, BeautyFirstCry, LivSpace, Pepperfry, Spinny, CarTrade, Nykaa

SaaS companies in India raised $1.5B in total funding in 2020, a number 4 times that of 2018. Investments in SaaS have grown by ~10% in 2020 vs. 2019 and average deal size continues to grow across all segments as the Indian SaaS ecosystem matures. There has been an overall increase in investments despite lower deal volume vs. 2019 due to higher average deal size, driven by large deals such as those of Postman, who raised $150M.  Over the course of the pandemic, 10 new unicorns have emerged: Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack, Mindtickle, Byju, UpGrad, and Unacademy.

The SaaS sector is positioned to keep growing beyond the pandemic. Although as a phenomenon SaaS is global, India has the opportunity to take its SaaS momentum to the next level. It could be classified across:

1.Horizontal business products targeting small & medium businesses (SMBs) globally, such as CRMs and ERPs, targeting Global SMBs

               Notable startups: Zoho, Kissflow, Freshworks, Chargebee, Agile CRM

2. Vertical SaaS businesses disrupting underserved markets, such as Companies disrupting underserved markets and verticals by replacing legacy processes

               Notable startups: Zenoti, Innovapptive, Innovaccer, CareStack, DataWeave, Tookitaki

3. Broad-based horizontal and vertical solutions serving enterprises and SMBs: SaaS companies witnessing bottom-up adoption within enterprises and catering to different verticals, and solutions building category leadership in emerging tech (e.g. APIs, GraphQL, cybersecurity)

               Notable startups: Postman, Hasura, BrowserStack, Acceldata

Investments in FinTech have increased marginally in 2020 vs. 2019, and payments have emerged as the most attractive sub-sector, driven by the surge in digital payments during the pandemic. The majority of the investment in the lending sub-segment occurred in Q1 2020, followed by smaller deals due to the pandemic

Key investment trends in Fintech sub-sectors:


  • VC activity in 2020 in digital payments grew by ~20% compared to 2019
  • This activity was driven by large late-stage deals—Razorpay ($100M), CRED ($81M), and BharatPe ($74M)
  • UPI payments are expected to grow at 35% CAGR over the next 5 years as they have seen an increase in volume and value of transactions in 2020


  • Investment traction in lending increased by ~4% in 2020 vs. 2019, fuelled by the continued momentum from 2019 in Jan–Mar of 2020
  • the pandemic hit this segment hard—the next two quarters witnessed limited activity with a recovery in Oct-Dec that saw 30% of the investments
  • SME & B2C lending slowed down in 2020 due to the pandemic’s impact on business


  • Insurtech increased by ~6% in 2020 vs. 2019 due to large deals such as PolicyBazaar, Digit, and Acko
  • These constituted ~90% of the deal value in 2020
  • Increased adoption for InsurTech driven by digital push, the lower inclination for physical interaction and higher health consciousness

Wealth Management

  • VC investments are largely in line with 2019
  • Wealth management (Groww, Small case, INDwealth) continued to attract funding in 2020 as in 2019, on the back of business growth driven by increased adoption in the traditionally underpenetrated markets
2021 Key trends and looking ahead
  • In the six month period from  January to July,  828 deals took place where startups in India received $16.9B in VC funding (total disclosed value)
  • Investment trends driven/accelerated by COVID – 19 have continued, with major investments in startups in EdTech, E-Commerce, Social Media & Networking, Food Delivery & Digital payments space

Wrapping Up

The investment trends created by the acceleration in adoption and transformation of digital media and technology across various sectors by the pandemic is something that will continue post it, due to the significant change in habits and patterns of humans. Going by the current trends, Tech and Tech-enabled startups, especially those in the consumer tech, SaaS and FinTech segments can expect more end-user adoption and thus better deal values. The exit outlook too remains positive for the next few years as most of the top VC funds’ portfolio is yet to reach maturity.

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