ECommerce titans Flipkart and Snapdeal drove a record Q1 funding for tech investment in India. Active early stage activity and a host of foreign investors placing bets in India highlight the vibrancy of the country's tech ecosystem.
Dollars are flowing into India’s tech scene, with Q1’14 hitting a multi-year high of nearly $427M in funding across 64 deals. Over the past four quarters Indian tech companies have raised a total of $1.3B across 266 deals, up 69% on a year-over-year (YoY) funding basis and 21% on a deal basis versus the previous four quarters (Q2’12-Q1’13).
The large uptick in funding figures was mostly due to large investments in eCommerce companies including a $360M cumulative Series E for Flipkart, as well as three separate funding rounds for daily-deal site Snapdeal totaling over $255M.
But, the increase in deals points to the clear influx of early-stage venture capital in India, which accounted for 82% of all tech deals over the past four quarters.
Ecommerce Leads in Funding, Trails in Deals
The majority of India’s largest fundraises in the past year were for eCommerce companies. The eCommerce Industry accounted for 72% of all funding to tech companies in the last four quarters, with Internet Software & Services and Mobile Software & Services companies rounding out the top 3.
When drilling down further, 8 of the top 20 sub-industries (based on # of deals) are related to eCommerce including multi-product commerce (those trying to be the Amazon of India), apparel and accessories, food & grocery, marketplaces, internet travel, comparison shopping, and eCommerce enablement companies.
Ed tech companies tied multi-product ecommerce retailers for the most deals over the past four quarters behind a $10M Series B for Simplilearn Solutions, a $2M Series A for eDreams Edusoft, as well as a variety of other early-stage deals.
FlipKart Catapults Bangalore to Most Funding
Bangalore garnered more deals and dollars than any other city in India, including the capital, New Delhi. Bangalore which is India’s third most populous city, known as the “Silicon Valley of India” accounted for 39% of all India Tech funding, with the previously mentioned $360M Flipkart Series E and online fashion and lifestyle company Myntra’s $50M Series E accounting for nearly 31% of all funding in India.
New Delhi came in second on a funding basis with 30 deals totaling over $300M, including a combined $258.7M raised by Snapdeal over the last four quarters. Even with the addition of Gurgaon to the New Delhi tallies (as both are considered part of the National Capital Region (NCR) wouldn’t push the region ahead of Bangalore but would put the region at nearly 29% of total tech funding.
Mumbai rounded out the top 3 in terms of funding with over $210M in funding across 52 deals, the second-highest among Indian cities.
500 Startups Is Most Active Institutional Investor
500 startups led all insitutional investors in India technology companies with over 20 investments over the last four quarters. Mumbai-based seed venture fund Blume Ventures was second, while Accel Partners rounded out the top 3 with investments in Flipkart and Myntra’s Series E, as well as BabyOye’s $12M Series B and CommonFloor’s Series C and D rounds, among others.
Of the top 10 ranked institutional investors, 4 were based in India (Blume Ventures, Kalaari Capital, IDG Ventures India, Kae Capital) while many have a presence there but are not HQ’d there highlighting foreign interest in India’s technology scene.
With both Flipkart and Snapdeal raising $100M+ rounds in Q2’14, the recent eCommerce funding explosion in India does not look like it’s losing steam. Stay tuned for further analysis surrounding exits and for click through for more international analysis of Canada, London, and Berlin.
All the underlying deal data featured in this analysis comes directly from the CB Insights private company financing and exit database. You can create a free account below.