Bengaluru: Business-to-business marketplace Udaan was looking to raise $150 million earlier this year with the intention of bringing in at least a few new investors. But not only did its existing investors Lightspeed India Partners and DST Global move swiftly to fund the entire round, they also pushed the company to raise a significantly higher amount.

Udaan raised $225 million in September, valuing the company at an eye-popping $1 billion, a fourfold increase in its valuation in six months. Udaan is just one of at least 10 Indian start-ups that have raised more capital than their founders had originally intended to. The companies include healthcare start-up CureFit, insurance provider PolicyBazaar, education platform Byju’s and social e-commerce platform Meesho.

The fundraises and the increased frequency at which start-ups are raising successive rounds resemble the funding boom in 2015. Investors are pouring massive amounts of capital both into early-stage start-ups in potentially large markets, as well as proven leaders such as PolicyBazaar and hotel brand Oyo.

“The pace of growth for these companies has been much higher compared to their counterparts a few years ago. Companies that are creating new markets such as B2B e-commerce or social commerce are growing at a much faster pace compared to their counterparts," said Karan Mohla, partner and executive director, Chiratae Ventures (formerly IDG Ventures India). “Because of this, investors are willing to put in more money in the right business model, which is present in a large market and has the right team."

The fundraises and their higher frequency resemble the 2015 boom-

Meesho, for instance, raised $50 million earlier this month from ShunWei Capital and DST Partners, among others. Interestingly, the founders weren’t even looking to raise capital, given that they had sufficient funds after having secured $11.5 million in June. But immense investor interest resulted in the company finally settling for $50 million, more than the $30 million that it aimed to raise.

Online home design start-up Livspace, too, mopped up $70 million in a round led by TPG Growth and Goldman Sachs, though it had initially planned to raise $40-50 million.

Even logistics firm Delhivery, which was exploring a public listing, may close a round of more than $400 million in primary and secondary capital. “Delhivery was looking to raise $250 million, but they are going to close a much larger round," said an investor, requesting anonymity.

The Economic Times reported earlier this week that Delhivery was close to raising $450 million in primary and secondary capital.

Such large rounds of capital are also pushing up valuations of start-ups to stratospheric levels. Apart from Udaan, which became a unicorn less than two years after starting out, at least two-three start-ups are expected to enter the coveted club by the year-end.

This hectic activity is typical of a boom cycle. However, it also raises questions about whether investors are pushing up valuations to unsustainable levels. In the previous funding boom in 2014-15, several start-ups, including Snapdeal, Housing, ShopClues and Hike, which raised huge amounts at rich valuations, quickly found that they couldn’t justify such increases when the funding tap went dry.

Even some of the better-performing ones such as Flipkart and Ola, which survived the funding downturn, had to accept painful down rounds before their valuations started to inch up. Down rounds refer to start-ups raising capital at a lower valuation than in the preceding round.

That said, some investors believe this funding boom is slightly different from the previous one. “One key difference is the nature of companies getting extremely strong investor interest," said Vinod Murali, managing partner at debt firm Alteria Capital. “In 2014 and 2015, it was more secular across sectors—multiple home service companies getting funded at the same time or numerous e-commerce companies getting high valuations—whereas this time, it is localized to category leaders, where the market opportunity is perceived to be deep and, in many cases, there is strong performance visible, with at least a path to profitability."

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