India's internet companies attracted investments worth $7.4 billion in the first three quarters alone, show data from research platform Tracxn, making 2017 a record year in terms of deal flow with more funding due from strategic investors.
In 2015, investments in internet companies had reached a peak at $7.6 billion and it steeply dropped to $4.4 billion in 2016.
Though early-stage startup funding shrunk in 2017, about $6.9 billion of the inflows this year have gone into series-B and higher growth-stage deals, fixing the deplored stagnancy in growth-stage capital the previous two years. What this suggests is that investors are still queuing up for businesses with strong metrics. With investors having recovered from their wounds from previous years, deal-room dynamics have undergone a significant shift in terms of what they expect from businesses as also entrepreneurs.
According to the Forrester's India is the fastest growing online retail market in the world. So naturally, market opportunity and the potential market size of a business have become key filters for investors, said Karthik Reddy, Managing Partner at Blume Ventures. “The focus now is on what problem area you are tackling, which is then directly correlated to the market size and opportunity. Market opportunity has become top-of-the-stack for us because that drives whether even a sub-segment of something can make a big enough company,“ he said in a statement to Economics Times.
Among many key things for conversation between founders and investors is -- smarter margin construct. Questions regarding building the right margin constructs are being asked much earlier in the investment cycle, at the series-A fundraising stage, according to investors. Variables such as customer acquisition costs and predictability for customer acquisition are on top of investors' check list.
A low profit margin generally leads to a higher product turnover. Low-margin products sell for close to the price it costs a company to acquire and maintain the product. In order to realize a profit on low-margin items, businesses need to keep prices competitive and sell a large volume of goods.
According to an another report by multinational professional services firm EY, private equity and venture capital (PE/VC) investments in the Indian subcontinent have reached a record USD 11.2 billion in the first half of this year.
Beyond healthy balance sheets, a company's ability to access varied pools of capital over and above equity is also testament to its survival potential, say investors.
In 2015, investments in internet companies had reached a peak at $7.6 billion and it steeply dropped to $4.4 billion in 2016.
Though early-stage startup funding shrunk in 2017, about $6.9 billion of the inflows this year have gone into series-B and higher growth-stage deals, fixing the deplored stagnancy in growth-stage capital the previous two years. What this suggests is that investors are still queuing up for businesses with strong metrics. With investors having recovered from their wounds from previous years, deal-room dynamics have undergone a significant shift in terms of what they expect from businesses as also entrepreneurs.
According to the Forrester's India is the fastest growing online retail market in the world. So naturally, market opportunity and the potential market size of a business have become key filters for investors, said Karthik Reddy, Managing Partner at Blume Ventures. “The focus now is on what problem area you are tackling, which is then directly correlated to the market size and opportunity. Market opportunity has become top-of-the-stack for us because that drives whether even a sub-segment of something can make a big enough company,“ he said in a statement to Economics Times.
Among many key things for conversation between founders and investors is -- smarter margin construct. Questions regarding building the right margin constructs are being asked much earlier in the investment cycle, at the series-A fundraising stage, according to investors. Variables such as customer acquisition costs and predictability for customer acquisition are on top of investors' check list.
A low profit margin generally leads to a higher product turnover. Low-margin products sell for close to the price it costs a company to acquire and maintain the product. In order to realize a profit on low-margin items, businesses need to keep prices competitive and sell a large volume of goods.
According to an another report by multinational professional services firm EY, private equity and venture capital (PE/VC) investments in the Indian subcontinent have reached a record USD 11.2 billion in the first half of this year.
Beyond healthy balance sheets, a company's ability to access varied pools of capital over and above equity is also testament to its survival potential, say investors.
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