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Q1 2016: Startup Investments In India Decrease By 24% Compared To Last Quarter

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The first quarter of 2016 went by in no time and now we have some raw data and figures to access the state of startup investments in India. According to a joint report by KPMG and CB Insights, investments in startups fell by 24% in this quarter compared to the last quarter.

The year started with various government measures under Startup India Stand Up India as well as Make In India to boost entrepreneurship in the country. That however, hasn’t really been able to surge up foreign investment within startups in the country, amid investor fears of exits, bloated valuations and brand valuaions.

The total amount of investments put by investors in startups in Q1 2016 stood at $1.15 billion whereas the total number of deals in this period stood at 116. This number also fell by 4% compared to last quarter.

The largest deals in the first quarter of 2016 were of $150 million each scooped by online grocery retailer BigBasket and e-commerce website Shopclues. This is the third consecutive quarter which saw a decline in investments as in December also, investments had fallen by a steep margin of 48%.

Data from Tracxn, exclusively provided to The Tech Portal, details a similar outcome :

With mounting investor hesitation and concerns of overvaluation, Indian investment continued to decline in the first quarter,

said the report by KPMG and CB Insights explaining the reason behind the slump in investments.

Investors have become particularly wary of cash burning and unprofitable business models of startups. They are no longer blinded by immense potential of the vast market in India through which startups often justify their heavy discount models and initial cash burning on the name of customer acquistion.

The report also states that this problem is not of India alone and is, in fact, a global problem as both total deal volume and deal value have declined everywhere especially in Silicon Valley region.

This is also due to many macroeconomic factors such as economic slowdown in China, rising interest rates, approaching elections in the US and a June referendum over the UK’s future in the European Union.

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