In the second month of 2016, 120 startups attracted capital from PE/VC firms and angel investors. A total of $620 million worth of funding was announced in February. In January 2016, 113 deals were announced.
Early-stage deals are on the rise - overall 75 pre-series A startups got funded in February 2016.
February will also go down in the history as a month when Flipkart suffered an over 25 per cent write-down in its valuation by investor Morgan Stanley. Flipkart, now joins other global Unicorns including file storage company Dropbox and data analytics firm Palantir that have had their valuations marked down by investors.
We’ve seen the same movie being played back in November 2015 when Fidelity marked down their investments in Snapchat and Dropbox, and then they corrected the valuation by marking up the valuations in December 2015.
Flipkart has raised more than $3.15 billion in 12 rounds of funding since launching in 2007 and was valued at $15 billion in the last round. The company has 15 major investors who hold stake in the company – Accel Partners, Baillie Gifford, Dragoneer Investment Group, DST Global, GIC,Greenoaks Capital,Iconiq Capital,, Naspers, Qatar Investment Authority, Singapore GIC,Sofina, SteadviewCapital, Tiger Global Management, T. Rowe Price and Morgan Stanley. Not all the investors have marked down their investment in Flipkart.
That said, the valuation markdown of India’s largest startup does signal to entrepreneurs and investors that the days of sky-high valuations might come to an end soon. Entrepreneurs looking out to raise funds and early-stage investors, who were hoping to see the valuation of their shares in their portfolio companies go up, should now be wary.
The IPO season
In February, two companies - TeamLease Services and Quick Heal Technologies - hit the Indian IPO market and received warm response from public investors. This is a rare event, since we don’t often see tech-enabled companies going public in India let alone two companies in one month. The last tech startups to list in India were Justdial in 2013, IntraSoft in 2010 and Naukri in 2006.
Funders raising funding
As per a Times of India article, Sequoia has raised a new fund worth $920 million to invest in Indian companies. This takes Sequoia's total assets under management in India to over $3 billion. Another early stage investor Kae Capital raised a $30 million new fund from existing and new investors.