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April 04, 2017

VC Investment Activity falls to 3 Year Low

At 68 investments (worth $314 million), Venture Capital investment activity in Jan-Mar ‘17 fell to a three year low, Venture Intelligence data shows. VC investment activity (i.e., number of investments) fell 47% compared to Q1 2016 and 43% compared to the immediate previous quarter. The previous low in terms number of VC investments was 63 investment in Q2 2014.  (Venture Capital is defined by Venture Intelligence as Seed Capital to “Series D”/Fourth round of investment of up to $20 million in companies that are less than 10 years old. The monthly analysis includes investments of over $20-M as well in tech startups that are less than 10 years old.)

The VC investment amount in Q1’17 dipped 17% compared to Q1‘16 and 26% compared to the immediate previous quarter. The fall in investment value was cushioned by a few large Growth Stage investments. (As many as 15 VC type investments in Q1’17 were over $10 million - versus 10 in Q1’16). 

Early Stage investment activity (Seed Capital, “Series A” and “Series B” deals) fell by as much as 50% compared to the same period in 2016.

Notable Shift Away from Consumer Internet & Mobile Deals

While IT & ITeS companies continued to account for 74% of the investments (by activity), the value VC investments in IT companies fell sharply to 53% (from 74% in Q1’16). Industries like Education (e.g. Cue Learn), Healthcare (iGenetics Diagnostics) and Microfinance (RGVN NE Microfinance) are grabbing increasing attention from VC investors. Within IT & ITeS, Enterprise Technology and B2B focused startups (with 29 investments) attracted more investments than Consumer Internet & Mobile companies (25 deals) during Q1’17, Venture Intelligence data shows. (In Q’16 the number of Consumer Internet & Mobile investments at 66 were over double the B2B/Enterprise Tech deals at 32.). 

“Entrepreneurs from Enterprise Tech and Non-Tech sectors complain – often with justification - that VC investors favour consumer focused companies. Given the nervousness around expensive Consumer Internet & Mobile bets and the significant un-invested capital available with VC firms, this is probably the best time for non-consumer focused startups to get VC attention,” remarked Arun Natarajan of Venture Intelligence.

IDG Ventures emerges Most Active VC

While investors like Accel India, Aarin Capital and the Ratan Tata Family Office - who were very active last year - slowed down their pace of investments significantly in Q1 2017, IDG Ventures India stood out as an exception announcing eight investments during the period.

Source: Venture Intelligence VC Deals Database

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Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.