The startup sector is not completely out of the woods as it saw a drop in investment of 36 per cent year on year at $236.81 million for the March quarter as investors are wary of early- and mid-stage funding. According to a News Corp VCCEdge report, the startup sector saw 165 deals worth $236.81 million in the January- March quarter of 2017 while in the same period last year, it stood at $368.68 million by way of 314 deals.
The report noted that early-stage funding went down as investors preferred to pump in money late. Angel and seed investments slumped both in volume and value terms, with deal volumes down to half with 120 deals in January-March compared to 245 in the same period of 2016. “A rise in Series-B funding even as seed and Series-A funding trends show a decline, which reflects investor cautiousness in early- and mid-stage funding and the increasing focus on market-readiness for funding,” said Gaurav Roy, Business Head, VCCEdge, News Corp VCCircle.
As per the report, series A funding fell 65 per cent in value terms on a year-on-year basis while series B funding improved 22 per cent in the first quarter. Meanwhile, consolidation in the startup space gathered traction as M&A deals witnessed a 75 per cent jump on a quarter on quarter basis.
“M&A deals have picked up momentum post-2015 coinciding with the drop in funding activity in the startup space, turning into an exit route for some promoters and a major source of funding for others,” Roy said.
He further said the enterprises that can work on a combination of strong revenue models and continuously updated technological knowhow which ensures a great consumer experience will continue to attract investors.