Startups funding in India has gone down to 50 per cent from last year, or say got almost halved this year, down to $3.8 billion in 2016 compared to $7.6 billion that Indian startups fetched last year, as risk investor pushed back with caution after two years of unprecedented exuberance.
The funding crunch impacted the overall ecosystem with the number of startups founded this year going down dramatically, data from startup tracking firm Tracxn said. More than 9,462 startups (including non-technology ventures) were founded in 2015, while this year birthed only 3,029 new companies, according to the data revealed by Tracxn — an research & analytics firm which tracks data from startups.
The number of startups shutdown rose to 212 from 144 last year. However, the number of funding deals stood almost the same at 1,031 compared to 1,024 last year.
Some of the top-notch startups that raised multiple rounds of funding last year like Quikr and Grofers did not raise fresh capital in 2016. Even India’s biggest and highest funded startup Flipkart couldn’t manage to raise fresh capital this year.
Sluggishness in funding has been felt not just in India but globally with some of the unicorn startups seeing their valuation being cut as sentiments around technology financing took a hit this past year.
Among the top ten technology deals were the Ibibo Group and Makemytrip merger, Yatra (acquired by Nasdaq-listed Terrapin for $218 million),and fund raises by Bookmyshow [Read here] and Hike [Read here].
Notably, in spite of overall funding slowdown, the early-stage startups’ funding did not see the slowdown.
For Indian Angel Network (IAN), the average funding round in 2016 has remained the same as 2015 at around Rs 2.5 crore. While last year, they received 6,000 applications, this year IAN received 7,500 applications.
One of most important highlight of Tracxn report is that US-based Tiger Global, which was one of the most active investment body in India last year with more than 30 investments, has almost retreated from India as it did not make any new investments this year.