Funding totals are skewed by mega-deals to major startups in the region, including Snapdeal, Olacabs, One97 Communications, and Flipkart.
India’s tech ecosystem is growing rapidly, with the number of deals increasing in each of the last five years. While 2017 is on track for a slow down in deal pace, funding is on track to reach a new high and more than triple totals seen in 2016.
With the tech sector still relatively nascent in the region, activity has skewed heavily toward early-stage deals, while a few of the mature breakout companies have seen huge funding rounds over the past few years.
Using CB Insights data, we analyzed annual and quarterly financing activity in the region and looked at deal share distribution over time.
Annual Financing Trends
2016 marked the fifth consecutive annual high for equity deals to tech companies in India, at 965, up from 882 the previous year. But, without any major rounds to some of the top startups in the region, funding totals were well below the amount raised in both 2015 and 2014.
The biggest deal in 2016 was a $200M Series F to e-commerce site Snapdeal. In comparison, 2015 had several mega-deals — a $680M corporate minority round into One97 Communications, the company that operates mobile wallet and e-commerce site PayTM, and two mega-rounds to Uber-rival Olacabs within a span of two weeks in 2015, totaling $725M.
2017 has also already seen its fair share of mega deals, and eclipsed funding for full-year 2016. This was driven in part by the $1.4B Series J raised by Flipkart in Q1’2017. In addition, Q2’2017 has seen a number of large deals including Softbank taking a corporate minority stake worth $1.4B in One97 Communications and Olacabs picking up $404M across multiple rounds in the quarter.
So far, $5.2B has been invested into Indian tech startups in 2017. However, at the current run-rate, deals are on pace to come in below levels seen in 2016 and 2015, at 832 for the year.
Quarterly Financing Trends
Since the high reached in Q1’16, deals have been trending downward. In Q1’17, there were 226 deals compared to 278 in Q1’16.
On a quarterly basis, funding amounts are also heavily driven by large funding rounds to mature players. Q1’16’s dollar high was pushed up by mega-deals ($100M+) to e-commerce site Snapdeal, grocery delivery startup BigBasket, e-commerce site Shopclues, and used car marketplace CarTrade. Q’17 saw the second-highest quarterly funding total due in large part to messaging app Hike‘s $175M Series D as well as a $140M private equity round to TCNS Clothing. However, last quarter still came in at $1B less than Q1’16.
Financing Trends By Stage
Over the past few years, seed/angel stage deals have dominated activity in India. Since 2014, the percentage of deals closed in the seed/angel stage has increased by between 7 to 11 percentage points each year. Last year, seed/angel share hit 73%, up from 51% in 2012. In 2017 YTD, seed/angel stage deals have taken a dip back down to 60%.
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