Money comes back to internet ventures, but investors choosy; here’s why

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New Delhi | Updated: April 2, 2018 5:08:57 AM

investment, investors, economy, online ventures

investment, investors, economy, online venturesA chunky .76 billion flowed into online ventures between January and March this year, according to data released by research agency Tracxn Technologies.

Private equity firms and venture capitalists seem to have regained confidence in Indian internet ventures, though they remain choosy about their investments. A chunky $1.76 billion flowed into online ventures between January and March this year, according to data released by research agency Tracxn Technologies.

This is about 78.3% more than the amount funds had invested during the same period last year of $982.7 million.

Chinese investors dominated the funding as Alibaba Group led a $300-million round in online grocery firm BigBasket. Others such as Abraaj Capital, Sands Capital and International Finance Corporation (IFC), also participated in the round.

Around the same time, Ant Financial — a payment company of Alibaba Group —invested $200 million in online food ordering service Zomato.

Meanwhile, Chinese tech firm Tencent invested $115 million in music app Gaana with owner Times Internet also participating in the round. In March, Japan’s SoftBank invested $61.60 million in online grocery firm Grofers.

Series C investments between January and March jumped 157% y-o-y to $425.2 million while money into in Series A level rose 66% y-o-y to $130 million. This indicates that a big chunk of the investments is flowing into businesses that are relatively mature and turning profitable.

Rahul Chowdhri, partner at venture capital firm Stellaris Venture Partners, believes this trend will continue as investors are turning cautious and unwilling to support businesses where the cash burn is very high. Moreover, they are selecting ventures carefully. As such, investments in early stage rounds plunged 62% year-on-year to $16 million between January and March. PE investments too came off by 82% y-o-y to just $36.8 million.

Consumer-centric online companies operating in food-tech, grocery-tech and similar spaces attracted most of the financial support at $1 billion in Q1CY2018, compared with $546.3 million in the same period last year.

Fintech too saw a substantial increase in funds invested at $154.9 million this year, up from $9.69 million last year. Among the Fintechs that attracted investments were Avail Finance which raised $17.2 million.

According to Traxn data, investments in 2017 amounted to $9 billion which was twice that in 2016. of this $9 billion, almost 50% was committed by Softbank which backed Flipkart, OYO Rooms, Ola and Paytm. China’s Alibaba also picked up a stake in Paytm Mall and put in another $280 million into BigBasket.

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