Indian Tech Startup Funding Report Q3 2017: Evidence Of A Funding Vacuum Despite $3.6 Bn Investment
Those who have witnessed the 2015- H1 2017 era of Indian startup ecosystem, understand the way Indian tech startups have led their way into the mainstream startup funding cycle. While 2015 was all about big investments, the Indian tech startup funding scene saw a major decline in 2016. The investments were being made with the philosophy of spray and pray. It was more about making a lot of investments, mostly smaller in size, across many startups and hoping some of the bets placed yield a substantial result. But it seems the credo has been reversed in 2017.
As per Inc42 Datalabs, the funding deals in the startups have increased by an overall average of 18% in the first three quarters of 2017 (from January to September). So far this year, Indian tech startup ecosystem was able to close more than 700 deals (until September 2017) across different segments with a record high investment of $9.4 Bn, a growth of almost 1.35X when compared to total investment in 2016 (January-December).
Although the overall numbers are quite impressive, there have been some crests and fall in the Indian tech startup ecosystem. As we prepare to relinquish the closing days of 2017, Inc42 looks back at the last quarter of 2017 (Q3 for FY17-18), with contemplation to understand what might lie ahead for the Indian tech startups community in this fourth quarter and subsequently 2018.
While ecommerce continues to be the investment-heavy arm of the Indian tech startups economy, fintech and healthtech are the two emerging sectors to look out for the year 2017 and the time to come. Bengaluru continues to be the hot spot despite continuous competition from Delhi/NCR. Big mergers and acquisitions have been observed throughout the year of 2017; the highlight of this quarter would be BYJU’S, BookMyShow and Freshworks acquiring two startups each.
Indian Tech Startup Funding Q3 2017: An Overview
Upon analysis of the data collected by Inc42 Datalabs, we observed the following trend in tech startup funding:
In Q3 2017, $3.6 Bn has been invested across 277 Indian tech startups, a 28% growth in startup funding and 25% growth in the number of deals with respect to Q2 2017. This is a significant recovery in comparison with Q2 2017, which witnessed 6% and 7% fall in the number of deals and total startup funding in contrast with Q1 2017.
Furthermore, a more comprehensive idea of the funding trends can be observed in the following MoM plot.
It could be concluded that there has not been any significant growth trend in the number of deals, while investment steadily increases at 18% CAGR.
Indian Tech Startup Funding Q3 2017: Stage-Wise Breakdown
As we have been in discussion since the beginning of this report, 2017 has shown an aberration from the spray and pray policy of investment which was observed during the years of 2015 and 2016. Upon juxtaposing the trends observed in terms of deals and funding in each stage the digression in the funding philosophy is quite evident.
Total funding amount in Seed and Bridge funding stage has fallen gradually (approx 30% fall for both stages), while, the number of deals is growing steadily suggesting that investors are more and more reluctant in betting money in the early stage of a startup.
Read everything else from the funding report here, originally posted by Inc42 →