Covid-19 crisis: Startup funding plunges by 29% in first six months of 2020

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Startup funding activities witness a downfall by 29% in the first half of 2020; edtech & test preparation technology see a spike in investments.
Startup funding activities witness a downfall by 29% in the first half of 2020; edtech & test preparation technology see a spike in investments.

Tracxn (1), a data analytics firm based in the US, has revealed the fall in startup funding activities by 29% in the first half of 2020. The startup funding activity fell from $5.9 billion to $4.2 billion, as compared to the same time last year. By far, only 443 companies have been funded against 725 companies funded in the first six months of the previous year, according to reports. 

The first half of 2020 also witnessed the emergence of three startup unicorns including, kids and baby products FirstCry, fintech firm Pine Labs, and online beauty & wellness retailer Nykaa, compared to six the previous year, making it half. 2019 saw 28 soonicorns or companies that held the potential to become a unicorn in the near future, in comparison 17 this year.

Spiked Investments in Edtech

While some startups managed to raise large funds, some faced difficulty accumulating adequate funding given the worsening of the economic situation. Edtech companies received large investments with the rise in online classes due to the lockdown measures, like Byju’s, that raised $300m and $200m from Tiger Global Management and General Atlantic, respectively. Another edtech startup that raised $110 million from investors, including Facebook Inc, is Unacademy. FirstCry received $300m from SoftBank Vision Fund.  

According to reports by Tracxn, the edtech segment saw a spike in investment by up to 538%, with total fundraising of $666.2m. Test preparation technologies from Byju’s, Unacademy, and Vedantu saw a significant rise in investments. 

Lending tech companies, including Navi, Lendingkart, and InCred, accumulated the most funding in their segment, summing to a total of $704.5m, with a rise of up to 67%. In the same period, we also witnessed the acquisition of digital credit company Paysense by fintech company PayU for $185m and delivery company Daily Ninja by online grocery company BigBasket.  

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A passionate writer with bachelor’s in the field of English & Journalism. Other than being a bibliophile, some of her hobbies are travelling, photography and poetry.

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