B2B startups cornered $8.5 billion in funding over past eight years: Matrix report

Indian B2B (business-to-business) startups have cornered over $8.5 billion in equity funding from investors across 500 funding rounds since 2015, according to venture capital firm Matrix Partners India.

Six unicorns, or privately held startups valued at $1 billion or more, have also been created in the segment, including Ofbusiness, Moglix, Zetwerk, Elasticrun, it said in the state of the B2B sector report ‘Digitizing Make In India’.

The total investment in B2B startups has grown 46% annually since 2015 to stand at $3.5 billion in 2021, the report said. Overall equity investment in B2B startups stood at $2.1 billion in 2022, amid a broader slowdown in investments.

“There is a unique situation in play in India, where we are pushing manufacturing, agriculture and are fast becoming a digital economy. Our digital infrastructure is best in the world,” said Avnish Bajaj, founder and managing director, Matrix Partners India, told ET in an interview.

According to the report, the B2B-enablement space is expected to grow further as tailwinds – digitisation, further formalisation of economy, realignment of global supply chains due to geopolitical tensions and government support (through foreign direct investments and product-linked incentive schemes) – continue to pose opportunities for new-age companies to innovate and disrupt practices.

Over the years, Matrix has invested in several B2B platforms including B2B commerce enabler OfBusiness; farm-to-retail platform for seafood Captain Fresh; software-led B2B food supply platform FarMart, and logistics and delivery solutions provider LoadShare.

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“If you look at tech penetration in GDP for the US, it went to about 40% (in terms of market cap) and then the Nasdaq corrected. For China, it went to 50%, at its peak. Our view is that because a bunch of these unique businesses are being built digitally – India’s tech penetration in the GDP will also cross 30%-40%. That excites us,” Bajaj added.


The report also surveyed over 150 stakeholders from B2B and agritech firms in India.

According to the survey, 53% respondents believed that the Indian manufacturing sector is expected to grow at over 10% annually in the next five years. This is further supplemented with growth in exports from India across electronics, chemicals, automobiles, iron and steel etc.

As per the report, 68% of survey respondents expect Indian merchandise exports to grow at more than 10% annually over the next five years.

“The manufacturing sector is expected to add $1 trillion to the GDP over the next 7-10 years. We believe that the digital infrastructure is actually helping the SMBs and agriculture segments, and that startups have to enable these cohorts further to enable them to do their job better as well as improve productivity. Further, with GST and UPI, these traditional segments are getting more comfortable to work with startups. Hence, we continue to be bullish for the B2B segment,” said Sudipto Sannigrahi, principal, Matrix Partners.

For the manufacturing sector, the report highlighted marketplaces for sourcing raw materials, services and software for factories, as well as blue-collar staffing and management solutions and logistics as major levers of disruption for Indian tech startups to look at.

At present, Ofbusiness, Zetwerk, Ximkart are already solving for raw material procurement for manufacturing, the report said. For agriculture, the report listed inputs to farm, farm-to-market linkages as well as access to credit for farmers as major areas for continued innovation for new-age tech platforms.

Companies like DeHaat, Agrostar and Sammunati are already working in the space to improve farm yield productivity and credit provisioning.

The report said there was scope for startups to look at areas of hardware-based precision farming and build platforms which help farmers access global demand.

Of the 140 Indian IPOs since 2020, nearly 30% are from the B2B sector, the report said.

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    Donovan Larsen

    Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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