While e-commerce valuations saw sharp mark-downs in the last six months, private equity and venture capital funds continue to invest reasonably large sums, reports Hita Gupta in New Delhi. In Q1CY16, investments in the space rose to $1.2 billion from $1.02 billion in the December quarter, according to Jefferies Equity Research. However, this was way lower than the $2.65 billion seen in the September quarter.
The funding in the March quarter was across 26 deals with e-tail getting almost half the amount. Ibibo Group, a competitor to MakeMyTrip, was the top beneficiary, raising $250 million from Naspers and Tencent. Ibibo Group, Snapdeal, BigBasket, CarTrade and ShopClues all raised over $100 million in funding during the quarter.
However, the $1.2 billion funding in Q1 of CY16 was considerable lower than $2.6 billion funding in Q3 of CY15.
The government on Tuesday allowed 100% foreign direct investment via the automatic route in e-commerce marketplaces, although it barred a platform from influencing the price of products directly or indirectly. Players such as Flipkart and Amazon that have vendors who supply more than 25% of the total sales may need to make changes to their models. The policy appears to be supportive of in-house logistics arms of e-retailers. Given FDI in inventory-led e-commerce models is not allowed, this could affect players such as BigBasket, which recently picked up $150 million from Abraaj Group, Ascent Capital and others. E-commerce companies such as Jabong and Myntra, which operate on a hybrid model, would need to shift to the marketplace model to be compliant with the norms.