A series of large financing rounds for some of India’s best-known startups has propelled the flow of risk capital into the sector to a high of $3.65 billion in the final quarter of 2020-21, marking an increase by over a tenth from the same period last year when funding had touched $3.22 billion. The buoyancy in the last quarter of the fiscal contrasts sharply with the decline in annual risk capital inflow during a year hit hard by the pandemic, with overall startup funding for FY21 shrinking by 21.1% to $12.36 billion, according to data intelligence platform Tracxn.

However, heightened interest from global investors led by the quick rebound from pandemic-induced lockdowns is stoking the massive inflow of capital this year, according to industry experts who pointed out that while more money is coming in, it is also flowing in the direction of large internet startups. “In the first six months of the pandemic there was a lot of uncertainty, but digital adoption was promising. Tech companies showed a lot of resilience and the India technology story was seen as intact,” said Ashish Dave, CEO of Mirae Asset Venture Investments, which counts Ola, Zomato, and BigBasket as portfolio companies. “This has led to hyper funding into companies that showed promise or executed well.”

Over three-fourth of startup funding during Q4 FY21, or about $2.8 billion, was in late-stage rounds, directed at large technology-first companies that benefited from disruptions caused to traditional companies due to the Covid-19 pandemic. The concentration of capital in a few companies is also underscored by the drop in the absolute number of deals to 265 in the quarter ending March 2021 compared to 390 deals during a similar period in the previous year, Tracxn data showed.