Venture capitalists and private equity players have slowed investments in Indian start-ups. Between January and March 2015, $465 million was raised by Indian start-ups. This year, funding has come down to $252 million.
"Funding activity was dominated by Bigbasket, which raised $150 mn, and Byju's, an online school education app, which raised $75 mn. So far, Bigbasket has cumulatively raised $261 mn in five rounds; for Byju's it was the first venture funding round," Morgan Stanley said.
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"During 2016, there have been 21 VC or PE funding rounds, of which only four were Series A/B. The rest were either seed or venture stage or late-stage funding in established companies.
There were no Series A/B rounds in March," the report added. But the money that has flowed in year to date was $1 billion, helped by $100 mn plus funding rounds each for CarTrade, Shopclues, Snapdeal and Bigbasket.
"VC/PE funds are putting money in companies
where there is higher confidence on unit economics or profitability. New start-ups with innovative business models continue to attract funds in the venture/seed stage," the report said.
"The development could have a cross-sectoral impact and determine the ability of start-ups to compete with traditional businesses," the report added.