Indian Startup Funding Report May 2016 – Delhi Dethrones Bangalore, HealthTech Beats Ecommerce

As we step into the month of June, amidst the chatter of changing trend, it is important we have a look at what actually happened this May. We at Inc42 gathered some data and analysed some numbers from the startup funding activity of May – Trends are indeed changing.

Even though the first 5 months of 2016 has already seen over 18 shutdowns, which is quite more than the number of startups that were shut last year, the ecosystem is showing small signs of recovery.

This May, the funding scenario for startup ecosystem in India posits some interesting findings. Around 87 startups got funded this May 2016, 14.5% more as compared to April 2016 and 61% more as compared to May 2015. While, ecommerce remains the major sector to receive maximum deal value, HealthTech has emerged as the top sector in terms of number of deals. Furthermore, number of acquisitions has increased by 13% as compared to April 2016 and 67% as compared to May 2015. Hyperlocal (with 5 M&As) has been the top sector for M&A in May 2016.

Pre-Series A Continues To Rule Early Stage Funding

Last month we observed a trend on the Rise of Pre-Series A funding. This month’s observation confirms our conclusion that there is indeed a steady rise of Pre-Series A. In just the two months of Q2 (2016) 30 startups got Pre Series A funding.

Delhi: The New Startup Hub

Delhi/NCR is clearly the new hotSpot for startups for Funding. Bangalore startup ecosystem seems to have reached saturation.

HealthTech De-thrones Ecommerce

Ecommerce has been observed to drop in terms of Deals since Q1 of 2016 while, HealthTech has shown a steady positive growth since 2015. In May 2016, HealthTech has secured 11% of the deals, leaving Ecommerce behind at 9%.

Late Stage Funding Crunch Continues

The Trend of Funding for Startups in Late Stage (both in number and amount) continues to shows steady drop. The $ 100 Mn funding of Fractal Analytics accounts for the slight rise in the Funding curve.

Other Key Takeaways

• On an average 3 startups were funded per day this month (May 2016). This could be an indication of recovery for Startup ecosystem.
• Although there were more late stage deals this May over last year, there was 26% drop from last month.
• Out of the 15 M&As, around 5 M&As were observed in Hyperlocal Sector suggesting market  consolidation is happening as the negative sentiment in this sector continues.
• Hyperlocal giants like Jugnoo, DriveU, Driverskart  and Quikr were observed acquiring smaller players to expand their services.
• Continuing its acquisition spree, GirnerSoft (CarDekho) made yet another acquisition this Month. This month, it acquired Volob Technologies.

[Research & Analysis by Ankan Das; Graphics & Designs by Satya Yadav]