Startup Street: A Glimpse Into How Covid-19 Hit Fintech Funding

Here’s what went on Startup Street this week.

A collection of U.S. one dollar bills.  (Photographer: Chris Ratcliffe/Bloomberg)
A collection of U.S. one dollar bills. (Photographer: Chris Ratcliffe/Bloomberg)

This week on Startup Street, a new report shows how fintech funding may be impacted due to the Covid-19 pandemic. Microsoft steps up its support for India’s startup ecosystem. And a clean energy firms buys an artificial intelligence startup in India. Here’s what went on:

China’s Funding Dry-Up Heralds Warning For Fintech

The economic shocks stemming from the Covid-19 pandemic that has gripped the world is decreasing investor appetite for fintech startups.

The first three months of 2020 saw funding activity in fintech fall to levels not seen since 2016, according to a new report by CB Insights. The quarter saw 404 deals worth $6.1 billion—a decline of 15% over the same quarter last year—across the globe as investors pulled back on early-stage bets.

Asia took the biggest hit, mainly due to China. The country, which was the first to have detected the novel coronavirus outbreak, saw fintech deals halve over last year to $175 million. That also meant that India overtook China in fintech funding activity for the first time in five quarters reporting deals worth $421 million.

India remained relatively insulated from the early impact of Covid-19 as the nationwide lockdown only began towards the end of March. The country saw 29 fintech deals while funding value grew 38% over the same quarter last year.

Not only that, the quarter saw only three fintech firms turn unicorns across the world. One of them—Pine Labs—was from India. The payment firm’s valuation soared to $1.6 billion after a deal with Mastercard.

However, plummeting deals in China should be a cautionary tale for the world as the real impact of the virus on funding will be pronounced in the April-June period.

As the first country to fight and start to recover from coronavirus, what happens in China could be a gauge of what’s ahead for fintech as the virus spreads across other regions.
CB Insights

Besides, Chinese investors pulling back on investments will only have a ripple effect on other countries, the report said.

The data also suggests that investors hurried to fortify their existing portfolios instead of making new, risky bets.

Early-stage fintech funding, which includes angel and Series A investments, fell 29% over the same quarter last year to $1,067 million. The share of seed funding in the total investments fell to 28% from 38% percent a year ago.

Microsoft To Support Indian Agritech Startups

Microsoft has launched new programme in India for agritech startups that are driving transformation in the sector.

The Microsoft for Agritech Startups programme is designed to help startups build industry-specific solutions, scale, and grow with access to deep technology, business, and marketing resources, the global tech giant said in a media release. The program will offer tech and business-enabling resources to help agritech startups innovate and scale up faster.

The programme will be spread across three tiers, all with their own benefits.

Startups can also get access to Azure FarmBeats, which can help them focus on core value-adds instead of the undifferentiated heavy lifting of data engineering, the statement said.

Available on the Azure Marketplace, Azure FarmBeats enables aggregation of agricultural datasets across providers and generation of actionable insights by building artificial intelligence and machine learning models based on fused datasets, it said.

Qualified Seed to Series C startups can boost their businesses with Azure benefits (including free credits), unlimited technical support and help with Azure Marketplace onboarding, the company said.

Startups with enterprise-ready solutions can scale quickly with joint go-to-market strategies, technical support and new sales opportunities with Microsoft's partner ecosystem.

Startups that are looking to create digital agriculture solutions have the opportunity to co-build customised solutions with Azure FarmBeats without investing in deep data engineering resources, the statement added

ReNew Power To Acquire Climate Connect

Clean energy firm ReNew Power on Thursday said it has inked a definitive agreement to acquire artificial intelligence and machine learning startup Climate Connect.

The acquisition will give ReNew Power access to energy management services. It will not only add to its digital capabilities but also allow it to offer a suite of digital product offerings to customers across the energy value chain, a media statement said.

ReNew Power plans to operate Climate Connect as an independent subsidiary that continues to focus on building a global team, data integrity and software development processes, as well as business development activities, it said.

“The first wave of growth in the renewable energy industry came through the addition of physical assets on the ground, the next wave will come through the development of digital products that help optimize powerflow from generators to distribution companies to customers,” ReNew Power Chairman and Managing Director Sumant Sinha said.

As distribution companies look to tighten operations and find efficiencies, digitsation will play a key role and Climate Connect is well-positioned to service this important market, Sinha said.

Source: PTI