The success of the startup ecosystem is defined by the number of successful startup exits. It acts as one of the best validation of the funding decisions made by investors. And, when it comes to Indian startup ecosystem there were concerns that India wasn't seeing too many exits of startups through mergers & acquisitions (M&As) or IPOs.

In the first six months of 2016, India ranked 3rd in global tech startup exit activity, according to US startup database CB Insights.

Unsurprisingly, the US led the exit activity with 857 M&A and 4 IPOs in the first six months of 2016, followed by the UK with 135. Indian startups witnessed 86 M&As and 2 IPOs. China, with just 15 M&As and 4 IPOs, fell to 11th position from 7th in the second half of 2015.

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Every country in the top 5 had exits dominated by the internet sector. Both India and Canada saw mobile exit activity account for 20%+ in the first half of 2016.

Interestingly, 72% of the companies who made exits didn't raise VC or PE money prior to exit. Given the large number of consumer internet companies, every country in the top 5 had exits in the space. In India, 28% of the overall exits were of mobile ventures, the highest among the top 5 countries.

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The report said there were over 1,590 exits globally in the first half of 2016, a 17% decline from the same period last year. However, the number of exits in the June quarter, at 820, was a 6% increase over the March quarter. After a lull, the second quarter saw some traction with 16 tech IPOs, including that of US-based personalized healthcare provider Nanthealth and cloud communications company Twilio.

Except for India (28%) and Canada (23%), Mobile exits have slowed down, reaching a 5-quarter low to account for 15% of global tech exits in Q2’16.

Notably, VC-backed exit activity saw a slight increase in Q2’16, globally, with 161 M&A deals and 8 IPOs. The last 3 quarters have trended upwards. However, when looking at the historical trend, we see that Q2’16 still falls below exit activity in Q2’15 (179) and Q2’14 (174).

Over half (53%) of the exits were at valuations less than $50 million, and 26% of the exits was between $50 million and $200 million, according to CB Insights. Only 4% of exits was at over a $1 billion — US-based personalized healthcare company Nanthealth topped the tech exit charts with a valuation of $1.7 billion.

While some of those companies saw successful exits (Twilio, Lytx, Ping Identity etc), there were a number of companies that sold for less than their total funding raised. For example, One Kings Lane raised $229M and sold for $30M while Gilt Groupe raised $284M and sold for $250M.

[Top Image - Shutterstock]

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