This article is an extract from Inc42’s recently released Annual Indian Tech Startup Funding Report 2017 which provides a meticulously detailed analysis of the funding trends and Merger & Acquisitions (M&As) in the Indian startup ecosystem for the period 2014-2017. To read future articles of this report, click here.
The Indian tech startups raised about $13.5 Bn in funding across 885 deals in 2017. The amount invested in 2017 is almost 3x than what it was in 2016, while the number of deals reduced by 7.14%.
However, if we remove the top fundings of 2017 including the near billion dollar cheques infused in the Indian startups like – Flipkart ($4 Bn across two rounds), Paytm ($1.4 Bn), Ola ($1.1 Bn) and Phonepe ($500 Mn), the funding amount falls down to $6.46 Bn which is technically a rise of 38% in comparison to the funding raised in 2016.
Before we delve further into this, let’s take a quick look at the key highlights from the report.
- Total Number Of Deals: 885
- Total Funding Raised: $13.5 Bn
- Startup Funded Each Day: 2
- City With Maximum Number of Deals: Bengaluru
- Sector With Maximum Number of Deals: FinTech
- Total Number of Investors Participated: 1078
- Total Number of M&As Reported: 133
- Total Number of New Funds Announced: 34
As per Inc42 Datalabs, since 2014, Indian tech startups have raised over $32.2 Bn across 3,048 deals. Interestingly, out of the total funding, about 42% of the funding was raised in 2017 alone.
An imperative finding which we got by delving into the startup funding data of the past four years is that there was a significant dip in the amount per deal (avg. ticket size) in 2015 and 2016, however, in 2017, things came slightly closer to what it was in 2014. While, in 2014, the average amount per deal was $15.8 Mn, it fell to $10.2 Mn and $4.9 Mn in 2015 and 2016 respectively. However, in 2017, the average amount per deal touched $15.2 Mn, which is still less than 2014.
Indian Tech Startup Funding Report 2017: Stagewise Breakdown
Continuing the age-long trend, seed funding was once again on the top when it came to the number of deals. Over $157 Mn was invested across 507 deals in seed funding in 2017. As far as bridge stage funding is concerned, a total of $60 Mn was invested across 89 deals in 2017 at this stage.
Moving on to the further stages, growth stage witnessed a total number of 194 deals with over $1.8 Bn being invested. While about $11.5 Bn was invested across 95 deals in the late stage.
Indian Tech Startup Funding Report 2017: Sectorwise Breakdown
In terms of sectors, enterprisetech took the first spot. The segment raised a combined funding of $531 Mn across 131 deals. The second stage was taken up by the healthtech sector which secured over 111 deals, a rise of 35% in comparison to 2016. The healthtech sector was closely followed by the fintech sector – which secured 111 deals in 2017, a 21% rise in comparison to 2016. Surprisingly, hyperlocal and ecommerce took the fourth and fifth spot with 99 and 79 deals respectively.
Coming to the top sectors based on the total funding amount being raised, as expected, ecommerce leads the charts here with over $4.6 Bn being invested, followed by fintech which secured $3.01 Bn in total funding. The third spot was taken up by the transport tech which secured an amount of $1.65 Bn in funding across 37 deals. Followed by the online travel and enterprise tech which reported a total funding of $796 Mn and $531 Mn respectively.
Indian Tech Startup Funding Report 2017: Geography Breakdown
Smoothly perched on the top position, Bengaluru scored 366 deals in 2017 followed by Delhi/NCR raking up a total of 223 deals. Other major cities such as Mumbai, Hyderabad and Pune took the third, fourth and the fifth rank respectively.
Even in terms of the total funding being raised for startups, Bengaluru tops the chart with an outstanding figure of $7.5 Bn funding. The second and third spots in the chart were taken up by Delhi with a total investment of $4.3 Bn and Mumbai with $582 Mn. Besides these top three cities, other major cities such as Hyderabad, Chennai, Pune and Kolkata are also gearing up and appear to be quite on track to become good startup hubs for startups in the country.
As far as Tier II and Tier III cities are concerned, the funding for these cities fell down by 46% with just 28 deals in comparison to 2016. However, the average ticket size for these startups showed some good insights, it stood at $10 Mn in 2017 which is a rise by 1,000%.
Indian Tech Startup Funding Report 2017: Investor Breakdown
The number of unique investors who participated in the Indian tech startup funding in 2017 stood at 1,078 which is a decline of 7% in comparison to 2016 which saw 1,162 investors participating.
One of the major factors that caused the rise in the number of investors in the intermittent years is the increasing participation of angel investors in the Indian tech startup funding activity. However, the year 2017 saw 512 angels participating in the funding activity, less than 653 angels who participated in 2016. However, the VC participation number grew from 249 in 2016 to 298 in 2017.
Besides these two, the year 2017 also saw the participation of over 198 unique corporates and over 27 platforms and networks investing in Indian tech startups.
Liked what you read so far? We have a lot more insights and data in our full report which covers the funding trends across Tier I, Tier II, Tier III cities, across 14 industries & sectors segregated by the funding stage, investor types and a lot more for the duration of 2014 to 2017.