[2014 half-yearly funding digest] Breaking down the $1.26 billion funding in India

The first half of 2014 was an action-packed 6 months when we saw a lot of private investments in the startup ecosystem, predominantly by the venture capital firms. In addition to these investments, we also saw a few mergers and acquisitions, signaling an alternative exit mode and a gradually maturing landscape.

Investments by Sector

Not surprisingly, e-commerce received the highest amount of funding given its capital intensive nature of business, at $602 million. This was followed by the Services sector where startups that dealt with a wide spectrum of services from payment enablement to event ticket sales. Consumer Web still remains strong with many innovative business models and web enabled solutions attracting investments. Surprisingly, Data Analytics, although is seeing a lot of market traction, has attracted just about $31 million in funding. Education and Healthcare continue to be average performers.

How active were the VC firms?

Most of the leading active VC firms in India made fresh investments or follow on investments in this period, with Accel Partners & Helion Venture Partners leading with 16 and 12 investments respectively. In terms of the sheer size of investments, the big ticket deals were the $210 million raised by Flipkart and the $233 million raised by Snapdeal in two rounds during this period, which saw participation from multiple investors. Other big ticket investments include those by Premji Invest in Myntra (before being acquired by Flipkart) and the Kinnevik investment into online classifieds Quikr for $90 million.

(This is an interactive chart. Select the sector to see the details below)

Note: The ‘Others’ category sees many investments because of new investors entering the fray or existing investors making fewer number of big ticket investments, such as PremjiInvest, DST Global, Times Internet etc.

What stage of companies got more funding?

The pre-Series A rounds namely Angel, Seed and Bridge Rounds accounted for just about $30 million of the overall investments. For about $400 million of the investments, the investment round has not been disclosed by the companies nor are the previous rounds clearly segregated. The rest of the investment kitty sees an almost even distribution between Series B and Series A. Interestingly, advanced rounds (Series C and beyond) have seen investments come to specific services startups or to e-commerce startups.

(This is an interactive chart. Hover with your mouse to see the values)

Which cities have seen active investor interest?

Bangalore continues to lead the investments, especially raking in the funding in the e-commerce and some Consumer Web areas. However, NCR (Delhi, Gurgaon, Noida) has seen active investments across the rounds amounting to over $400 million. NCR is coming up as an attractive startup destination with companies such as Snapdeal, Zomato and others being headquartered there. Chennai saw a big investment of $31 million coming into Freshdesk, but not much action otherwise. Hyderabad’s biggest investments came in Healthcare (NephroPlus) and Wearable Tech (Ineda Systems). Interestingly, numerous smaller towns such as Nashik, Bhubaneshwar, Coimbatore, Jaipur, Lucknow and Nagpur are attracting investments in specific sectors such as agri-tech, healthcare, clean tech and food.

(This is an interactive chart. Hover with your mouse to see the )

Mergers & Acquisitions

In addition to the investments, the six month period saw seven mergers and acquisitions taking place. Three took place in April, two in January and one each in May and June. In the month of May we saw one of the major e-commerce giants in India, Flipkart buying out Myntra for an estimated $300M. Another deal in e-commerce sector was Snapdeal acquiring Doozton in April. We also saw Facebook acquiring Little Eye Labs from India in January. Four of the acquired companies were based of Bangalore and three out of Delhi.

Interesting Patterns

• 23 e-commerce ventures either raised funding and 2 were acquired with most of investments happening in the month of May
• Big Data & Analytics sector saw five ventures raising Series A amounting to about $30 million, four of which are in Bangalore
• Cloud technologies continue to remain of interest, with eight of them raising funding at various stages
• In Consumer Web, Quikr raised the highest funding amounting to $90 million
• In the Education sector, of the 15 startups that raised funding, 9 were either Seed or Series A stage, indicating a lot of young ventures trying to solve the problem
• The Real Estate sector saw a rising interest, with six companies successfully raising investments. Housing.com raised two rounds amounting to $37 million while CommonFloor.com raised Series D funding and also acquired Flat.to
• 14 ventures in the Mobile sector raised investments including three at Series B
• In the growing mobile enabled payment sector, both Ezetap and Mswipe raised funding

Note: All charts are based on funding amounts and investor names available in the public domain. The analysis does not include those investments where the deal particulars were kept private.

Which sector do you think will be the focus in the second half of 2014? Which big ticket investment other than Flipkart do you think is going to dominate the funding scene? Share your thoughts below!