The Indian tech startup ecosystem is again moving towards market correction this year. According to the Inc42 Datalabs’ Indian Tech Startup Funding Report H1 2018, till June 22, $3 Bn was invested across 372 deals — a 47% decline in the total funding amount and a 17% drop in the number of deals as compared to H2 2017. Also, M&A activities showed a 28% decrease, with only 54 M&A deals finalised in H1 2018.
Although this may seem like bad news, it’s not the entire story. Unlike the funding winter of 2016, things are not as gloomy as they may appear from an absolute point of view of the M&A activity and funding numbers.
H1 2018 marked the biggest acquisition for the Indian tech startup ecosystem, with Walmart placing a $16 Bn bet on Indian ecommerce company Flipkart. Now, with Microsoft, Walmart, Tencent, and Tiger Global at one end, Amazon at the other, and Alibaba poised in the third spot with Paytm Mall, the stage is set for Indian ecommerce to emerge as a battleground for global players.
Also, the Indian startup ecosystem added four new unicorns in H1 2018 — Paytm Mall, Policybazaar, Swiggy, and BYJU’S — with many more queued up for glory. Paytm Mall and Swiggy bagged a whopping $445 Mn and $310 Mn in total funding, respectively, so far this year.
Further, if we compare the Q1 2018 and Q2 2018 figures, there was an increase in both the funding amount as well as the number of deals in the second quarter till June 22.
Indian Tech Startup Funding Report H1 2018: An Overview
- H1 2018 maintained the ongoing trend with seed stage startups raising $183.75 Mn across 179 deals
- Ecommerce ($786.87 Mn across 49 deals) and fintech ($631.29 Mn across 70 deals) were the two top sectors in terms of funding amount and the number of deals, respectively
- Bengaluru retained its top spot with 119 deals, but witnessed a 49% decline in the number of deals in H1 2018, compared to H2 2017, followed by Delhi/ NCR and Mumbai
- According to projections based on Inc42 DataLab’s time series data, H2 2018 is expected to witness about $4.8 Bn in funding across 503 deals