Internet companies make hay when the sun peeks out

 

It remains to be seen if funds raised crosses the $5.9 billion internet companies raised in the funding frenzy of 2015. Graphics by Ajay Negi/Mint

Fund-raising by Indian Internet firms has risen sharply this year, with some large one agreeing to so-called down-rounds.

Indian firms in Internet business raised over $3.8 billion in the first half of the year against $2.7 billion in the whole of 2016, according to data collated by Jefferies India Pvt. Ltd.It remains to be seen if funds raised crosses the $5.9 billion internet companies raised in the funding frenzy of 2015. Graphics by Ajay Negi/Mint

In the March quarter, Flipkart and Ola accounted for a bulk of the $2 billion that was raised, with both agreeing to a lower valuation vis-a-vis the previous funding round. This was followed by a large fund-raise by Paytm ($1 billion); Oyo Rooms ($250 million) and a few others such as Swiggy.

It remains to be seen if funds raised crosses the $5.9 billion internet companies raised in the funding frenzy of 2015. Nevertheless, private market investors are more careful and are restricting investments to companies who are leaders in their respective segments, and/or have a business model that is both sustainable and is working towards profitable growth.

Despite this more stringent screening process, the large amounts raised is a heartening sign. Of course, unless firms demonstrate better unit economics as well as sustainable growth, the funding tap may go dry again.

 

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