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Indian VCsstartup funding

VC Investments in Startups Decline 25% to Lowest in Last 3 Years

According to a recently published report by Venture Intelligence, a research firm led by media entrepreneur Arun Natarajan, the quarter ending June saw venture capital investments in Indian startups decreasing by a discouraging 25 per cent from the figure locked in a year ago.

The report highlighted that the venture capital investment amount in startups in India has decreased to USD 275 million in 78 investments from last year’s figure of USD 309 million in 104 deals.

Venture Intelligence, which is considered as a leading source of information and analysis on private company financials, transactions and their valuations in India, also revealed that the June quarter was the lowest VC investment quarter seen by the Indian startup ecosystem in the last three years period.

According to Arun Natarajan, Founder and CEO of Venture Intelligence, the dismissal VC investments numbers for the June quarter are a result of increasing challenges in the Mobile and Consumer Internet space in the country. Speaking to MoneyControl.com, he said, “While the challenges in consumer internet and mobile sector had become quite apparent last year, they are beginning to reflect quite starkly in terms of VC investment figures during 2017.”

However, despite the downfall trend right now, Natarajan is hopeful that the future would see sectors such as Health-tech and 'deep-tech' seeing some major movement and emerge stronger on the investors' radars.

The Venture Intelligence report revealed that Awfis, which is India’s largest Co-working company, recorded the largest VC investment in the June quarter by raising a whopping USD 20 million from Sequoia Capital.

However, it was the IT and IT-enabled services sector that ended up bagging the biggest share of the VC investment pie this quarter. They attracted almost 70 per cent of the total VC investments this quarter.

Other than Awfis, other startups that raised large investments included e-commerce search software firm Unbxd which raised a whopping USD 12.5 million, followed by insurance marketplace Coverfox which raised USD 11 million and logistics tech company Fortigo which raised USD 10 million.

The Venture Intelligence report also revealed the names of the most active VC firms in the June quarter. According to it, Sequoia Capital, Lightspeed Venture and Accel India were the most active firms making four investments each.

The report further highlighted that the IT capital of India, Bengaluru, once again netted the most investments with 26 deals, followed by Delhi-NCR with 22 deals and Mumbai with 14 investments. However, the report also shared that the numbers are far below from the respective quarter a year ago.

According to the 2002 founded research firm report, private equity investments have continued to grow this quarter, too. The private equity investments rose by 62 percent annually in the June quarter and hit USD 5 billion mark for the third straight quarter.

Japan's Softbank led the pack by making a humongous investment of USD 1.4 billion in Indian e-wallet company, Paytm. In totality, the quarter witnessed 124 investments worth USD 5.4 billion.

However, the figures were still lower than the Private equity investments of 5.9 billion witnessed in the March quarter.

The IT and IT-enabled services sector companies once again accounted for nearly half of the private equity investments pie by raking in almost $2.6 billion across 68 private equity deals. They were followed by banking and financial Services companies which netted USD 689 million across 12 investments.

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