India’s startup ecosystem, which bounced back from the COVID-19 induced slump in the second half of 2020, is seeing an increased interest from global investors.

Homegrown startups raised USD 3.65 billion in the first quarter of 2021, an increase of 13.4% over the corresponding period last year, local media Economic Times (ET) said, citing data from intelligence platform Tracxn. Another research firm, Venture Intelligence, puts this number at USD 4.2 billion, 40% higher than that in the first quarter of 2020 when Indian startups raised USD 3.5 billion.

After the pandemic hit early last year, Indian startups suffered a major funding crunch as VCs held on to their money to ensure their portfolios have enough runway for 12 to 18 months. However, as digital adoption in the country spiked due to mobility restrictions and tech startups figured out a way to ride that wave, investors opened their wallets and started pursuing deals in the latter half of 2020.

The rush was such that there were almost two dozen new global VC firms, including Bond Capital, Bellerive Capital, Makers Fund, and American Family Ventures that entered India last year, according to Venture Intelligence data.

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The funding into the world’s third largest startup ecosystem was driven by large financing rounds in big startups. These included edtech decacorn Byju bagging USD 456.7 million, fantasy sports platform Dream11’s USD 400 million Series F round, B2B marketplace Udaan’s USD 280 million in a Series D round, and food delivery giant Zomato’s USD 252 million in a Series J round.

More than 75% of the startup funding, USD 2.8 billion, during the three months ending March 2021 went into late-stage rounds of tech startups. On the flip side, this resulted in a drop in the number of deals to 265 in the quarter, compared to 390 deals during a similar period in the previous year, the ET report said.

Industry insiders believe the funding boom in edtech, fintech, and SaaS has led to a healthy inflow of capital into the Indian startup ecosystem. This, in turn, has bumped up the valuations of many startups and put them on the fast track to become unicorns.

With Indian startups lining up for public listing beginning this year, investors’ confidence in the country’s startup ecosystem has grown exponentially. Industry experts also feel that the capital from rising exits will add to investors’ dry powder—the money in their cash reserves to back startups.

“There is a huge appetite among investors to invest in India and in local startups. People who were sitting on the sidelines are also ready with large checks. Companies that would have raised USD 50-USD 100 million are now raising USD 100-USD 300 million,” Mohan Kumar, founder and managing partner at software-focused Avatar Ventures, said in an interview with local media Times of India.