In its 7th Annual India Venture Capital and Private Equity Report 2015, sent exclusively to The Tech Portal, IIT-Madras has compiled, what I could personally call, one of the most comprehensive data metrics related to India’s funding and Private equity scene.
While our writers would be breaking down the report extensively and publishing some important analysis, I did not find anything as appropriate to start the breakdown, as the early-stage funding scenario in India.
The report, which produced some contrasting results, considering the flurry of news we have been receiving of hyperlocal delivery, grocery, e-commerce startups being funded, highlighted, that it was indeed the health-tech sector which bagged the maximum average funding, when compared among nine of India’s most promising startup sectors.
As per the report, the overall average investment in the early stage funding has been ₹12.58 crores. While there are marginal variations among the different industries, the differences are not very large. IT&ITES industry has the lowest average investment in early stage (₹10.16 crore), whereas the highest average investment was seen in the HLS sector (₹16.31 crore).
However, even though healthcare received the maximum average investment, the most number of early-stage investments were — as has been commonly witnessed — received in the Internet Marketplaces & E-commerce sector. This is followed by the IT & ITES sector. More than 60 per cent of the early stage funding has been in these two sectors. The sectors that have the least amount of early stage funding are agriculture and manufacturing sectors.
Apart from this, the report also highlighted how much average stake was acquired by investors across these investments — a metric you rarely find anywhere these days.
At the overall level, the shareholding acquired by investors is close to 30 percent. The average stake acquired is the highest in the HLS sector (33.65 percent), whereas it was the lowest in the manufacturing sector (19.58 percent). However, the number of data points in manufacturing is low. In sum, our analysis indicates that the average fund raised in early stage round is around ₹12 crores, and the entrepreneur should be prepared to give up a shareholding of 30 percent in the firm for this investment.
We will continue to release a slew of articles on this comprehensive piece of data provided exclusively to us by IIT Madras’ Department of Management Studies. Stay tuned.
Founder of the The Tech Portal. Now a consulting editor for the platform. Has advised and worked with numerous early/mid-stage startups during past 5 years in various roles. You can click on his LinkedIn profile and drop in a message to get in touch.