Moneycontrol
Dec 30, 2016 08:09 PM IST IST | Source: Moneycontrol.com

Startup investments decline by half to USD 3.9 billion in 2016

The past year saw massive rationalisation by VCs they became cautious in investing large amount of funds or taking risky bets. Even as large part of their funds remains unspent, VC firms are likely to extend their cautiousness to 2017. In the New Year, startups are expected to suffer from the after-effects of demonetisation.


Priyanka Sahay


Moneycontrol


The total funding received by India’s startup sector in 2016 reduced by almost half to USD 3.9 billion, against USD 7.5 billion received in 2015, according to data research firm Tracxn.


Consumer retail firms attracted the maximum amount of funding with USD 861 million invested in 2016 repeating a trend witnessed a year before. This was however over thrice as lower than the USD 2.68 billion, such startups raised in 2015.


The sharp decline in funding indicates a trend which is likely to continue to first half of next year.

Source: Tracxn



Majority of the funds this year were raised by Snapdeal, Shopclues, Paytm and Lenskart among others. Snapdeal raised USD 221 million from investors such as Iron Pillar Fund and Brother Fortune Apparel.


Gurgaon-based Shopclues entered the unicorn club this year by raising USD 100 million from venture capital firms including Tiger Global Management and Nexus Venture Partners.

(Note: ConsumerTech segment includes Retail, transport, groceries, healthcare and travel)


Source: Tracxn


Noida-based Paytm raised USD 60 million from Mediatek. Faridabad-based Lenskart raised USD 90 million from IFC, Premji Invest and TPG among others.


According to Tracxn, the enterprise technology sector (B2B) which includes companies such as Rivigo, Freshdesk and Druva altogether raised over USD 540 million from over 200 deals.


Funding in B2B software sector was down by over 70% compared to USD 957 million raised in 2015.


(Note: ConsumerTech segment includes Retail, transport, groceries, healthcare and travel)


Source: Tracxn


Financial tech was also a favourite sector of investors, even before demonetisation announcement was made by the Modi government. Fintech startups raised over USD 484 million during 2016. Companies such as Paytm and Mobikwik raised USD 60 million and USD 90 million respectively. The sector raised USD 1.18 billion in 2015.


Travel was one of the few sectors which saw a rise in investments this year. It saw investments of over USD 365 million in 2016 against USD 238 million during the previous year. Auto, health-tech and ad-tech sectors raised close to USD 198 million, USD 178 million and USD 67 million respectively. In 2017, the trend to invest in consumer retail will continue. Fintech is likely to become the second hot favourite sector for big ticket investors in the New Year.


priyanka.sahay@network18online.com


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