In what could be considered as a warning bell and a signal of the times that are starring the Indian startup industry right in the face, the Start-up funding decreased from a decent $611 million figure in the first quarter of the year 2015 to a mere $301 million in the first quarter of the year 2016.
The figures were released in the Startup India Funding Report prepared by VCCEdge, the financial research platform of the VCCircle Network, which is a part of News Corp. The report defines startups as companies that have raised an angel or seed stage funding, or a venture round in the last five years of its operation.
According to experts, this 50 percent decrease in the Indian Start-up funding could be seen as the industry’s shift from the “hyper-funding” phase that it had witnessed last year.
The report forecasts a consolidation in the Indian start-up sector, as a result of the greater caution being adopted by investors, correction in valuations and smaller deal sizes than before,
The Startup India Funding Report by VCCEdge also shows a massive decline in both the value and volume of deals in Series A and Series B stages.
According to the report, the number of deals in Series A stage witnessed a 52 percent drop, from 67 deals in the first quarter last year to a sad 32 deals this year. Further, the value of deals in the first quarter also faced a steep 56 percent blow, from $240 million in 2015 to $105 million this year.
The numbers were also on a decreasing curve for Series B deals. The report highlights the number of Series B deals declining from 24 last year to 13 this year and the total deals value during the first quarter declining from a solid $281 million to a minuscule $137 million.
While everything seems to being downhill for the Indian startup industry, there’s some good news too. The volume of seed and angel funding has risen by a good 33 percent from 142 in the first quarter of last year to 189 this year. But, here’s a catch. While the volume has increased, the value of these deals has declined due to the decrease in ticket sizes. From $91 million last year to $59 million this year, the value of the seed and angel funding deals declined by 35 percent in the first quarter.
[Top Image – Shutterstock]