Funding received by existing and new Indian startups has reduced drastically. It has also resulted in steep drop in the valuations of companies. This is a sharp downturn after two glorious years of an open purse policy by Venture Capitalists, Private Equity and other Angel investors, where they were more than generous in investing helping startups with funds.
The funding has gone down from $7.6 billion in 2015 to $3.8 billion in 2016, as investors are now looking for more stable investments for their money. They prefer to invest in other bond schemes which offer much better and safer rate of returns. As per data released by Tracxn, a startup analytics and tracking company, 9042 startups were incorporated in 2015 as compared to 3029 startups that were started in 2016.
The crunch in funding has been felt globally and even some big startups like Flipkart have seen their valuation drop. The number of startups that shut down last year was 144, and that number has increased to 212 this year. The number of funding rounds that happened this year stood at 1,031, which is almost as many as last year (1,024).
There were no billion dollar investments this year, but there were some investments to the tune of a few hundred million dollars. Just before it got acquired, iBibo raised $250 million fron Naspers, Snapdeal raised $200 million, Hike messenger raised $175 million, Big Basket raised $150 million and Car Trade raised $145 million. It was still quite an eventful year if you ask us.
The industry has also seen some big acquisitions. Makemytrip acquired iBibo for a whopping $720 million; Yatra.com was acquired by Terrapin for $218 million, Citrus Pay was bought by PayUbiz for $130 million and Jabongg was acquired by Myntra for $70 million.
Many big startups like Flipkart, Quikr and Grofers raised a lot of money last year and hence did not need to raise any more money this year. Tiger Global, one of the most active funds last year has beaten a hasty retreat and did not make any big investment this year.
With demonetization, GST and many new initiatives by the Government, startups are bound to get more business and make more news.