The number of new start-ups launched this year has slumped to merely 800 in last 9 months in compare to 6000 in last year. The fundings may have exceeded the last year figure but what is worrying is the volume of deals, which has gone down to 700 in compare to 1000 in last year, according to data from Tracxn.
In 2017, the start-ups have raised around $8 Billion, compared with $4.6 billion in 2016. The funding figure seems robust because of mega investment raised by Flipkart and Paytm, which contributed $4.5 billion in $8 billion.
If one takes out Flipkart and Paytm funding it leaves a thin figure and worrisome trend.
According to experts in the industry, many shut down, tough time faced by large start-ups and slow in e-commerce growth have taken a toll on entrepreneurial ecosystem in the country.
Pankaj Makkar, managing director, Bertelsmann India thinks e-commerce and consumer internet in general, companies will have to innovate and find new business models; otherwise many of them won’t be able to find fresh capital. He also added that there will be more shutdowns and consolidation in future.
According to RedSeer Management Consulting, in 2016 the e-commerce market grew by less than 15% to $14-15 billion.
This is also due to many entrepreneurs who had flocked to start consumer internet companies in 2014 and 2015 have shifted to areas such as software as a service (SaaS), business-to-business e-commerce and financial technology over the past 18 months.
Many believe that it has been happening because e-commerce market in the country had relied on deep discounts and extensive advertising for growth, have been struggling to find the right business models.
This might be worrying for many budding entrepreneurs, but many good startups which have raised a good amount of fund reinstated the faith that if you have a good business model, investors will flock at your shop.