Indian startup companies have broken free from their mould and are now leading the way into the mainstream conventional startup funding circle. This progression was observed during the fiscal years 2015-17, 2015 being the year of huge investments while 2016 saw a major decline, thanks to the demonetization policies that came into effect.
Investments were many in number with smaller amounts, the general motto is ‘spray and pray’, several startups had investors, most of them hoping that whichever company they invested in yields a considerable amount in return.
The year of their returns
For the above investors, the fiscal year 2017 is the year of their returns; the first six months viewed a smaller number of deals in the Indian tech startup ecosystem, but what is noteworthy is that the sum invested in this period was much higher.
According to statistics from Inc42 Datalabs, the financial support deals in the startups have augmented by an overall average of 18% in the first three quarters of 2017. Thus far this year, the Indian tech startup ecosystem was able to secure more than 700 deals across diverse sectors with a record high investment of $9.4 Billion, an escalation of almost 1.35 times when contrasted to the total investment in 2016.
Although these statistics are striking, there have been downs in the Indian startup domain.
Next emerging domains
For the upcoming fiscal year of 2018, the commerce sector continues to be the major investment option, with fintech and healthtech being the next emerging domains to keep a lookout for.
Bangalore has been the ‘in’ state for all such companies, getting competition from Delhi and other national capital regions.
In 2017, although there hasn’t been any momentous augmentation in the number of deals made, investments have still steadily been increasing at its own pace.
Unenthusiastic about investing
It has also been observed that an increased number of investors are unenthusiastic about investing their money into a startup in the early stages. Rather, they are leaning more and more towards ROI (Returns of Investments) and exits.
The online e-commerce website Flipkart was the biggest highlight of 2017, compared to all the funding deals as it closed at around 6.2 billion dollars. But on the other hand, other e-commerce websites have been declining while healthtech and enterprisetech are seen as emerging.
Due to the change in the startup funding policy, as well as sector saturation, exits have increased energy in the Indian startup system domain.
Visible shift in the system
Through all this data, there is a visible shift in the system, because just four companies have together secured 3 billion dollars out of the 3.6 billion and the rest seven hundred startups receive only 600 million each; this, therefore, indicating that there is a fund vacuum present.
So in 2017, a lot of entrepreneurs are now realizing that a lot of plans haven’t been thought out and followed through. By presenting the preliminary growth economics, one might get the early stage investors on board, but the potential rounds are tougher, as entrepreneurs’ ideas are being looked at thoroughly along with investors insisting on unit level economics, scalability, and novelty with more drive.