Investments in growth-stage startups touched a record $3.16 billion across 189 rounds in 2019, marginally up from last year’s $2.92 billion, data from Venture Intelligence showed. In contrast, growth-stage funding had doubled in 2018 from the previous year.

The year saw far larger deal size than earlier, including Series B and C rounds worth $75-150 million each.

That apart, big-ticket investors, such as private equity firms, also started participating in early investments in startups.

“A lot of private equity investors are getting interested in tech-enabled businesses, given that some of the survivors from the 2015 cohort have delivered on strong economics and growth,” said Shivakumar Ramaswami, founder, Indigoedge, a startups-focused investment banking firm.

Some of the largest growth-stage fundraises in 2019 included scooter rental firm Bounce raising $72 million (Series C); credit card startup Cred raising $120 million (Series B); MyGate, which provides security management for gated communities, raising $56 million (Series B); and real estate platform NoBroker securing $51 million (Series C).

Startup funding is expected to be tight in 2020, after the poor listings of Uber and Lyft in the US, and WeWork’s initial public offer (IPO) meltdown, where its listing plans were canned and its value was reduced by 80% within a few weeks.

Startups are also hitting the market earlier to beat the shifting investor sentiment.

“We are seeing a lot of firms trying to raise money prematurely, owing to the expectation of the market slowing down. This happens at the end of every cycle. Given this context, the companies need to be more sensible with their ask and ensure they are well capitalized rather than optimizing for price,” said Ramaswami.

Growth-stage startup funding is also buoyant given the entry of more domestic investors, indicating permanent capital, rather than foreign funds that fly in and out, and write cheques every few months.

Mint reported on 15 April last year that venture capital (VC) investors are increasingly participating in mid-stage (Series B-C) rounds, attracted by more opportunities and lower competition.

While there are dozens of dedicated seed-stage funds and a handful of late-stage investors, mid-stage has not seen dedicated pools of capital. Investors such as A91 Partners, Korea’s Mirae Global Asset Management and Iron Pillar have now targeted the mid-stage exclusively.

“Even foreign funds such as Tiger Global Management and Steadview Capital have hired people locally, to have their ears to the ground, and indicating a longer term view,” said an investor who has worked with the two funds, requesting anonymity.

Japan’s SoftBank Group, famous for writing large cheques to late-stage technology firms at huge valuations, is also changing its strategy.

It is looking at growth-stage firms, as early as Series C, and wants to write cheques from $100 million onwards in promising companies, Mint had reported last June.

Growth-stage also contributed to the overall venture capital funding numbers, which also hit a record high of $10 billion in 2019, breaching two previous records—$9.6 billion and $9.1 billion in 2018 and 2017, respectively.

The rise of business-to-business (B2B) startups, across sectors, from e-commerce to fintech and software, was also a large investing theme.

Out of the $10 billion, B2B firms raised $4 billion, the highest-ever percentage at 40%, rising from the 25% last year. In 2018, B2B firms had raised $2.3 billion out of the total $9.6 billion.

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