Most of the time, numbers hide the real story. But at times, they show the complete picture. Consider this: of the $13.5 billion invested in the Indian tech startup ecosystem last year, about $4 billion was invested by Japanese internet giant Soft-Bank, and the top five funding consumed about $8 billion of the total amount. “2% deals cornered 75% of the funding,” reveals the latest ‘Indian Tech Startup Funding Report’ by Inc42.
“There is no doubt that 2017 can be termed as a Year of SoftBank India invasion,” says Pooja Sareen, cofounder of Inc42, a tech startup media platform. Last year, she says, witnessed a series of billion-dollar funding raised by the Indian consumer companies such as Flipkart (approx $4 billion), Paytm ($1.4 billion), Ola ($1.1 billion). “Most of these fundings were led by Softbank,” says Sareen.
Overall, 2017 ended on a happy note for startups. Though there was a 7% fall in deals, there was a 189% jump in funding amount last year over 2016, which saw 953 deals and $4.68 billion funding.
ET Magazine brings you an exclusive synopsis of the 2017 annual report by Inc42.
10 KEY TRENDS:
STEEP DECLINE IN SEED FUNDING
No. of deals dipped by 16.5% and 2% as compared with 2015 and 2016, respectively. The funding amount too plunged by 29% and 21% as compared with 2015 and 2016, respectively.
ANGEL PARTICIPATION RISES IN GROWTH STAGE DEALS
Over 75 angel investors participated in 83 deals beyond seed and bridge funding rounds.
SERIES A CRUNCH
There was a sharp decline of over 35% in Series A* deals in 2017. Out of the startups that got seed funding in 2014 and 2015, about 22% and 12% respectively, went on to raise Series A.
2% DEALS CORNERED 75% OF THE FUNDING
An enormous funding vacuum was observed in startup investments in 2017, with most of the funding going to just 2% of startups.
SHIFT TOWARDS B2B STARTUPS
B2B startups witnessed a 11% and 9% rise in the deals compared with 2016 and 2015, respectively.
FINTECH CONTINUES TO SHINE
There was a massive jump of 280% compared with 2016.
DIP IN TIER-2/3 FUNDING
A 46% dip in funding for startups in tier II and III cities. On the positive side, the average ticket size increased by 100%.
OVERSEAS INVESTORS GO GAGA
Apart from SoftBank, Naspers and Tencent, several new international investors struck deals last year.
BRIDGE FUNDING STAYS MUTED
While in 2016, bridge funding deals stood at 92, amounting to $60 million, in 2017, the amount remained the same though the number of deals dipped: 89 deals amounting to $60 million. Average ticket size increased from $650K in 2014 to $1.3 million last year.
SECOND QUARTER TOPS THE CHART
Second quarter of last year saw 71 deals, amounting to an investment of $453 million. Q1 saw an investment of $542 million across 48 deals
TALE OF TWO SERIES:
SERIES A FALLS
After 180 deals in 2015 and 117 in 2016, the Series A funding dipped further to 105 deals in 2017, amounting to $539 million. While the average ticket size stood at $6.74 million, over 43% of the deals were for less than $5 million. 12% of deals were for over $10 million.
SERIES B RISES
After falling from 68 deals in 2015 to 55 in 2016, Series B jumped to 65 deals in 2017, amounting to over $1.08 billion— a jump of 50% over 2016’s $720 million. The average ticket size was $18 million. While over 55% of the deals were for less than $10 million, 30% were for over $15 million.
Late-stage funding leapfrogs: 95 deals amounted to $11.5 billion last year, a 308% jump in funding from 2016.
HYBRID MODEL WAS THE FLAVOUR
Startups with B2B/B2C models bagged $9.7 billion in funding from a total of 420 deals. B2C startups came second with 289 deals and $3.4 billion, followed by B2B ones that raked in $411 million across 176 deals.
*Series A startups are ones that have declared their round as series A