Internet start-ups in demand: Funding jumps 1.5 times over 2016

Online shopping, travel, taxi aggregators attracted good flows in the past three months

2016 witnessed some normalisation and markdown in valuations of start-ups; it was also a weak year for PE/VC funding in Indian start-ups. But, the tide seems to have turned, with a marked improvement in these investments since March 2017. In fact, according to a study by Morgan Stanley, cumulative funding in April and May has exceeded that in the full of 2016.

“Cumulatively, total funds raised to date in 2017 at $4 bn-plus has far exceeded the total amount raised in 2016 ($2.6 bn). This does not include the amount raised by listed companies such as MakeMyTrip of $330 million within the online travel space,” said Parag Gupta, IT and internet analyst at Morgan Stanley in a report dated May 25. Online shopping, travel, taxi aggregators, payments and logistics attracted good flows in the past three months. After last year's ground check, valuations of internet start-up firms will be determined by a company’s ability to achieve profitability while continuing to grow. Investor interest in these firms will also depend on a their ability to deliver efficient returns on capital invested.