Author Archives: Aristotle Consultancy
Delhi-NCR has emerged as the most funded city in 2016, according to a report by startup analyses firm Tracxn. In the first six months of 2016, Indian startups raised $1.8 billion, out of which Delhi-NCR received $917 million.
This was helped by $250 million and $200 million funding raised in February by Gurgaon-based Ibibo Group and Delhi-based Snapdeal respectively.
Bengaluru was the second most funded with $489 million, followed by Mumbai with $296 million.
Pune and Hyderabad took the fourth and fifth spots, with $59 million and $4.6 million respectively.
The country’s capital also led in the number of deals (155). The average ticket size was $5.8 million.
This mirrors last year’s results for the same period, when Delhi NCR had been the most funded city, having raised $1.1 billion with an average ticket size of $10 million. Bengaluru and Mumbai had followed with funding of $951 million and $490 million respectively.
The funding amount has significantly reduced this year.
In the first six months of 2015, startups in the top five cities raised $2.7 billion, a billion more than this year’s figure.
Out of top 10 funding rounds this year, six were raised by e-commerce companies, four of which were based out of Bengaluru.
“Delhi-NCR has a disproportionate number of ecommerce startups. E-commerce is a mature sector and most of these companies were raising later stage funding rounds,” said Tracxn co-founder Neha Singh. “The other cities have more technology-centric startups.”
However, the number of funding deals rose to 402, from 324 last year.
This signifies that the space is seeing a correction in the investment size and not in the general attractiveness of Indian startups.
Nitin Sharma, principal at venture fund Lightbox Ventures, said this was a good sign for the ecosystem since the angel, seed, pre-series A round funding flow is still healthy.
“A correction was bound to happen since the funding had expanded almost eight to nine times between 2013 and 2015, faster than what the ecosystem could absorb efficiently and sustainably. It’s a good time to invest. Valuations aside, startups being built right now are more lean and mean, and hopefully more product UX (user experience) focused than discount-dependent. Of course, the near-term challenge has to do with later stage rounds,” he said.
In June, Lightbox Ventures had participated in a $30 million funding round for Gurgaon-based used car marketplace Droom.
The study finds that Ahmedabad, Chennai, and Jaipur are emerging as new startup hubs.
The three cities raised $34 million and accounted for 30 deals this year.
Source – The Economic Times
Startups in India for long have been the favorites of private equity and venture capital investors doling out funds. Banks, however, have been tough players on the funding scene. While banks in India (both private and public) are beginning to introduce initiatives to cater to startups, the efforts remain largely limited to regulatory guidance and corporate banking incentives. Some of them have stretched out as an incubator for startups but extending loans has been missing from most banks’ strategy to attract entrepreneurs.
JSW Ventures has received mandatory clearances from SEBI to invest $15 Mn (INR 100 crores) in early stage startups over a period of three years. The initial focus will be on technology-enabled startups operating in education, healthcare, financial services, SaaS and enterprise software space.
The fund will be overseen by Parth Jindal, son of group chairman Sajjan Jindal, and Managing Director, JSW Cement. Gaurav Sachdeva, a former executive of Brand Capital, has been appointed as Managing Partner.
As per an earlier announcement, JSW Venture Fund is eyeing a sweet spot of INR 3- 6 crore per deal, investing across seed to Series-A rounds of funding.
“Technology innovation is happening across sectors, from old-fashioned verticals like real estate to research-driven work being done in machine learning and artificial intelligence. We think that the opportunity to innovate across sectors and businesses is immense and want to be a part of this transition,” said Parth.
He further added that, “As an early-stage fund, we will not only provide capital but will remain strong partners of our investee companies as they grow, leveraging the JSW Group’s expertise and experience to help them blossom into world-class companies.”
Team, product-market fit, scalability and technology innovation will be the key criteria while assessing companies. “We typically like to lead investment rounds and work with founders helping them discover and solve business critical problems,” said Gaurav.
JSW Ventures is part of the $11 Bn JSW Group with interests in steel, energy, infrastructure and cement. The cue for launching this fund came in late 2015. The fund will invest proprietary capital of the family and not as a strategic investment vehicle.
Source – Inc42
Angel investors don’t just reside in big cities. Investors from smaller cities such as Guwahati, Kanpur, Vadodara, Raipur, Visakhapatnam, Agra, Jaipur, Chandigarh are increasingly ready to bet on innovative business ideas, says a study by deal making platform LetsVenture. According to the study which looked at deals struck by investors and startups on its platform, 13% of the investors in 2015-16 were from tier 2 and 3 cities.
Among the metro cities, Mumbai-Pune region and NCR have reported the highest number of angel investors at 337 and 307 respectively. In comparison, Bangalore came third with 298 angel investors.
It was a similar story when it came to the home base of startups. While Bangalore was leading with the number of startups in 2015, Delhi-NCR has moved to the top spot in 2016. Tier 2 cities saw an increase in the number of startups setting up base in these towns across India, with Pune recording the highest.
The study also looked at sectors that were most preferred by startups. E-commerce followed by healthcare, marketplace and data analytics were the most active sectors. Furthermore, seed funding in the first and second quarters of 2016 have seen a rise in seed deals versus those made in the same year-ago period. The year 2016 also saw a higher number of business-to-business (B2B) startups set up shop, as compared to 2015, when business-to-commerce (B2C) firms dominated.
Source – TechCircle
It’s not only investor appetite that has taken a turn of caution in the past few months, but entrepreneur expectations have been rationalised too, data from around 10,000 start-ups on deal-making platform LetsVenture shows.
Start-ups at ideation, beta, and proof-of-concept (POC) stages (early-stage start-ups, essentially) in the consumer sector have been seeking a lower amount when raising funds this year, compared to the last, while those making revenues are doing the opposite, given the investor-interest in companies that would turn a profit quickly.
The percentage of stake dilution that start-ups are offering has also come down in start-ups across the board.
In the business-to-business sector, however, expectations for fund-raise have largely remained the same, or even increased compared to last year, in line with the trend of investors looking to fund B2B start-ups which need far less cash to expand, many of which are even profitable, compared with cash-heavy, loss-making consumer Internet start-ups.
To be sure, entrepreneurs don’t always get the valuation they ask for or expect—the final number may look very different, but this is a fairly accurate representation of expectations.
Source – Livemint