Accel Partners may no longer fund e-commerce start-ups

VC fund which has invested in companies such as Flipkart, Myntra says there is not much room left for new e-commerce companies

Despite being one of the leading investors in the e-commerce segment in India, venture capital company Accel Partners says there is no room left for new e-commerce trading and retail companies in the country. Accel which has invested in e-commerce ventures such as Flipkart, Myntra and Chakpak, said there are hardly any real differentiating factors in most of the e-commerce firms coming up now.

“We were the first fund to invest in e-commerce trading platforms in India. We don’t think all the companies funded are bad. However, now many ‘me too’ kind of companies are coming up. We believe there is not much room for new e-commerce companies to come and exist,” said Prashanth Prakash, partner, Accel Partners.

According to data from Venture Intell-igence, a research firm focused on PE and M&A, there have been 32 PE/VC deals in the e-commerce space in India amounting to around $209 million. In 2012, there have been 13 deals worth $205 million so far.

India is witnessing a lot of e-commerce companies setting up shops. Prakash however said “e-commerce is now the story of yesterdays” and the company is not looking at seed-funding any new e-commerce company which follows a trading pattern. The company would instead fund its existing portfolio companies from its first fund.

Accel Partners, which entered India in 2008 after the merger of Erasmic Ventures with itself, has so far invested around $100 million in India.

In September 2011, it formed a second fund with a corpus of $173 million.

“There are opportunities for the existing e-commerce companies to scale up and they may attract investments from some of the later-stage VCs. But we are not planning to seed-fund any new firm. Now, there are talks of consolidation and acquisition between portfolio companies and other e-commerce companies,” said Prakash.