Big money is coming back to Indian e-commerce ventures as private equity (PE) players and venture capitalists decide to up their bets and support stronger retailers. Funding in e-commerce/internet firms nearly doubled to $7.21 billion between January and August from $3.33 billion in the same period of 2016, data from Tracxn Technologies show.
The bulk of the investment has come in from Japan’s SoftBank Group which infused money into both Flipkart and Paytm. In all, it has decided to bet about $4.3 billion across the two businesses.
Excluding the Japanese investor’s commitment, e-commerce and internet firms raised a little less than $3 billion between them. One reason for this, say industry watchers, is that most businesses are yet to break even even though the founders are now focussing a lot more on the bottom line even as they scale up.
“Founders are looking at margins, the cost of customer acquisitions and the monthly cash burn. But while some good businesses continue to get financial support, the rest must build a strong business so investors are convinced,” said Rahul Chowdhri, partner and co-founder, Stellaris Venture Partners.
Other investments in 2017 so far include Oyo Rooms raising $250 million from Greenoaks Capital, Sequoia Capital, Lightspeed Venture Partners and SoftBank, and Swiggy raising $80 million from Norwest Venture Partners, Bessemer Venture Partners, SAIF Partners, Accel Partners and Nasper. Ace2three.com in the gaming segment raised $74 million, and Ola and Goomo took in $50 million each in the travel sector.
Sunil Goyal, MD and fund manager, YourNest Venture Capital, said more inflows could be expected in the next few months. “Also, we can expect more funds to flow in at the entry levels,” Goyal said.
Meanwhile, venture capital flows remain subdued. The D Series investments — or money that comes in after a business has been around for about three to four years — have fallen significantly by almost 90% to $86 million. That reflects the inability of a host of companies to grow revenues fast enough to cover costs. However, E Series investments — or money that comes in when a business is mature — doubled to $240 million.