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<keyword id="138263" type="UNKNOWN" weightage="20" keywordseo="startup">Startup</keyword>s are the next big economic force in India. Close to 4,400 technology startups (July data) exist in India and the number is expected to reach over 12,000 by 2020. India is the world's youngest startup nation with 72 per cent founders less than 35 years. And I see experts pitching (pure PR or negligence) places like UK, Israel, China etc to be the next <keyword id="6357722" type="COMPANY" weightage="20" keywordseo="silicon-valley">Silicon Valley</keyword>. 
 Recently <keyword id="6492870" type="CITY" weightage="20" keywordseo="News-Corp">News Corp</keyword> <keyword id="135682" type="COMPANY" weightage="20" keywordseo="VCCEdge">VCCEdge</keyword> released its Annual Deals Report for CY 2016. Here are a few highlights of the report 
 
• Despite a gloomy year for PE/VC investments, PE Exits, M&amp;A Deals and Fund Raising via IPOs hit 5 Year High in 2016! 
 
• Investors unlocked $6.79 billion worth of investments across 239 exits in 2016 
 
• 633 Domestic M&amp;A deals amounting to $32.77 bn. played a big role in M&amp;A deals hitting a five year high of $61.44 bn. 
 
• Fundraising via IPOs surged to $4.12 billion raised across 93 IPOs 
 
• There were 50 new PE funds launched during the year with a targeted capital of $5.3 bn. – a fall of 11% in number and over 68% in value terms. 
 CEO of News Corp <keyword id="191131" type="PERSON" weightage="20" keywordseo="Nita-Kapoor">Nita Kapoor</keyword> said, “While M&amp;A activity in India perked up in 2016 thanks to a few multi-billion-dollar deals that companies struck either to slash debt or consolidate their market share, what we are seeing is the flow of angel/seed money into enterprises in sectors like fintech, healthcare, education and travel which will continue into 2017. There is a huge funding opportunity for start-ups operating in these sectors that succeed in delivering a good consumer experience.”

$6.79 billion in investments, 633 Domestic M&A deals, India hits a 5-year high

As per the report ‘<keyword id="3591500" type="UNKNOWN" weightage="100" keywordseo="VCCEdge-Start-up-Funding-Insights">VCCEdge Start-up Funding Insights</keyword>’ from <keyword id="3591499" type="UNKNOWN" weightage="100" keywordseo="News-Corp-VCCircle">News Corp VCCircle</keyword>, which focuses on the funding activity in the National Capital Region (NCR), NCR has witnessed 873 funding deals to the tune of $1,571 million of the total $6,721 million across 3,682 deals ever since 2011. This represents 24% of the total number of deals and 23% of the total deal value. 
 
Last year, however, was a landmark year registering a deal value of $608 million as compared to the $289 million in 2014, but at the going rate, looks like 2016 won’t be able to match this amount, let alone match last year’s performance. The number of deals also swelled 110%, going from 143 in 2014 to 300 in 2015. 
 
Talking of this year, 2016 has until now seen 155 deals worth $170 million, out of which the investment of $17.19 million made by Sequoia Capital India, Omidyar Network India, Maverick Capital, and HBM Partners in the Gurgaon based Healthcare Start-up, 1MG Technologies grabbed the top rank. 
 
On the other hand, online gaming company Gamooz Interactive Solutions’ funding to the tune of $15 million made by angel investors such as Taha Nabee, Anupam Gopal Mittal, Anand Kumar Ladsariya, Devesh Ghanshyam Chawla, Suneel Bandhu and Miten Mehta can be counted as the top Angel/Seed funding deal. 
 
Here are the segment-wise highlights since 2011: 
 
• Food-Tech got the maximum number of deals, having 50 investments worth $28 million 
 
• Travel-techn saw maximum fund flows, bringing in $80 million across 46 deals 
 
• Fin-Tech came second in terms of value and fourth in terms of number of deals, closing 34 investments amounting to $70 million 
 
• Edu-tech space attracted $36 million from 39 deals 
 
• Tech-enabled platforms across other segments such as advertising, real estate, health, and entertainment saw $55 million of funding from 73 deals 
 
However, there has been a fall in the pace of Series A rounds of investment and beyond, which is bound to affect start-ups in the “High-Growth-High-Burn” mode. 
 
“The question we need to ask is whether or not the current startup ecosystem in the region lacks enough high quality startups eligible for Series A &amp; beyond round of investments. The slowdown is attributed to investor pragmatism and selectiveness in funding enterprises that have business models that best optimize the funding they receive. Start-ups have to, perforce, ‘Conserve and Grow, or Perish’. The silver lining we at News Corp VCCircle see is the emergence of new investment vehicles such as venture debt besides a new genre of celebrity &amp; angel investors,” said Ms. Nita Kapoor, Head - India, New Ventures, News Corp and CEO, News Corp VCCircle. 
 
About the author: News Corp VCCircle runs financial news website VCCircle.com, a startup news site Techcircle.in, and the financial data platform VCCEdge. 
 
<a href="http://startupmindset.com/wp-content/uploads/2015/02/rsz_content-780x720.jpg">Image source</a>

NCR start-ups are facing funding crunch; attract $170 million in 2016

<ul><li><keyword id="12197987" type="General" weightage="20" keywordseo="tataneu" source="Orion">TataNeu</keyword> could be worth $15 billion as it is in position to clock $20 billion in sales by the end of this decade.</li><li>JM Financial has based this prediction on the gross merchandise value (GMV) of key categories on the superapp.</li><li>The company’s GMV currently stands roughly around ₹16,000 crore ($2 billion).</li></ul><keyword id="8187544" type="General" weightage="20" keywordseo="tata-digital" source="Orion">Tata Digital</keyword>’s superapp TataNeu — which brings all of its digital services and apps on a single platform — could be worth $15 billion, as per a report by Indian financial services group JM Financial. This could be a natural transition for the steel-to-tech-to-auto conglomerate which also has various consumer interest businesses including retail stores like Westside, Croma, FMCG brands from tea to salt, and also owns the grocery delivery app, BigBasket. “We believe there is a lot of value in the Tata ecosystem that Tata Digital can help unlock. Based on the gross merchandise value of key categories on <keyword id="12651286" type="General" weightage="20" keywordseo="tata-neu" source="Orion">Tata Neu</keyword>, we believe the value of Tata Digital could be upwards of $15 bn,” it added. <cmsannotation type="cmsannotation" annotationid="‘An audacious endeavour’" comment="subhead" text="‘An audacious endeavour’">‘An audacious endeavour’</cmsannotation> In fact, the report compares it to the e-commerce pivot of US retail giant, Walmart — and can successfully leverage online and offline shopping experience — something even Amazon and Jio are trying to achieve. But, it comes with its own risks. “While Tata is ticking all the right boxes in their digital shift, the mere enormity of this transition makes this an audacious endeavour. Drawing lessons from Walmart’s pivot to e-commerce, we believe Tata will need sustained investments in this space to succeed,” the report noted. <cmsannotation type="cmsannotation" annotationid="More services – travel to food and more" comment="subhead" text="More services – travel to food and more">More services – travel to food and more</cmsannotation> JM Financial has also not accorded any value to Tata Pay, its own UPI service and other categories in the TataNeu bubble such as food and travel. It expects the company’s valuation to evolve with addition of new products and services. Tata Digital is yet to add existing brands like Vistara, Air India, Tanishq, Titan and others to the <keyword id="3848715" type="General" weightage="20" keywordseo="super-app" source="Orion">super app</keyword>. “One thing is certain though. If executed well, there is a lot of value within the Tata group which Tata Digital can help unlock,” the report noted. <cmsannotation type="cmsannotation" annotationid="A 10x growth in gross merchandise value" comment="subhead" text="A 10x growth in gross merchandise value">A 10x growth in gross merchandise value</cmsannotation> If all works fine, JM Financial believes that TataNeu’s GMV could increase to ₹1.54 lakh crore (approximately $20 billion, at current conversion rate) by the end of this decade. The company based this prediction on the gross merchandise value (GMV) of key categories on the superapp. Its GMV — total value of merchandise sold over a given period of time — currently stands roughly around ₹16,000 crore ($2 billion). <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY2021/FY2022 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY2030E </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">BigBasket </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6,558 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹97,676 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1mg </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹309 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹4,607 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Curefit </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹161 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹2,404 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Croma </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5,315 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹27,424 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata CLIQ </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹356 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5,310 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Westside </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,940 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹6,826 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Caratlane </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,265 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹9,808 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹15,906 crore ($2 billion) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1,54,056 crore ($19.8 billion) </td></tr></tbody></table>Source: VCCEdge, JM Financial Estimates Note: ‘E’ in FY2022E stands for estimates. <cmsannotation type="cmsannotation" annotationid="Good competitive advantage" comment="subhead" text="Good competitive advantage">Good competitive advantage</cmsannotation> JM Financial highlighted that it is difficult to accurately ascribe value to TataNeu due to lack of granular data around the number of users and GMV as it is early days of the app's launch. However, it emphasized that the valuation of the company should be akin to valuing an e-commerce company. TataNeu, which rolled out a little over eight months ago, was only open for 800,000 Tata Group employees and their friends and family till its formal launch in April. The superapp began with a cumulative consumer base of 120 million users and 2,500 offline stores, along with an 80 million app footprint across its digital assets. JM Financial believes that TataNeu is well placed to take market share away from its existing competitors like Flipkart, Amazon, Reliance Retail/JioMart. “Tata’s leadership in the fast-growing e-grocery segment (through Big Basket) and compelling omnichannel offerings in two of the largest ecommerce categories – lifestyle and consumer electronics – position it well to take market share away from the incumbents,” JM Financial said. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/stock-market/news/maruti-suzuki-adani-enterprises-metropolis-idbi-bank-among-stocks-to-watch-out-for-on-june-7/slidelist/92049909.cms">Maruti Suzuki, Adani Enterprises, Metropolis, IDBI Bank among stocks to watch out for on June 7</a> <a href="https://www.businessinsider.in/business/startups/news/flexiloans-com-bags-90-million-to-cover-six-years-of-journey-in-one-year/articleshow/92041187.cms">FlexiLoans.com bags $90 million to cover six years’ of journey in one year</a> <a href="https://www.businessinsider.in/business/corporates/news/indian-corporates-made-a-full-comeback-with-111-billion-profits-but-the-same-cant-be-said-for-2023/articleshow/92033485.cms">Indian corporates made a full comeback with $111 billion profits, but the same can’t be said for 2023</a>

TataNeu could be worth $15 billion all thanks to BigBasket, Croma and Westside

<ul><li>The Indian government is planning to infuse more money towards Venture Capital (VC) fundings from its startup India fund that was initiated three years ago, to foster startup fundings at early stage. </li><li>As of now, of the ₹100 billion fund, only 19% has reportedly been invested towards <keyword id="7178479" type="UNKNOWN" weightage="20" keywordseo="venture-capital-fundings">venture capital fundings</keyword> for <keyword id="6362513" type="UNKNOWN" weightage="20" keywordseo="startups">startups</keyword> — and the Indian government is planning to increase it to 33% by the end of this fiscal. </li><li>It takes four-five months for a VC to apply and get funds approved from government — the government claims to trim it to two-three months with the introduction of automation.</li></ul>Prime Minister Narendra <keyword id="6354642" type="PERSON" weightage="20" keywordseo="Modi">Modi</keyword>’s startup India fund, which was introduced three years ago to foster startups at early stages, has reportedly allocated only 19% of its total capital so far. The total corpus under the ‘fund-of-funds’ initiative is ₹100 billion — and the Indian government is planning to increase it to 33% by the end of this fiscal, TOI <a href="https://timesofindia.indiatimes.com/business/india-business/startup-india-fund-allocates-just-19-to-vcs-in-3-years/articleshow/67316586.cms">reported</a>. The funds are allocated to venture capital funds, which have to, in turn, invest at least double the amount that the government pumps in for startups. Around ₹19 billion fund has been engaged into VC firms up to December 2018, said Mohammad Mustafa, chairman and managing director of the Small Industries Development Bank of India. He further added that they <a href="https://timesofindia.indiatimes.com/business/india-business/startup-india-fund-allocates-just-19-to-vcs-in-3-years/articleshow/67316586.cms">aim to conclude</a> this financial year allocating ₹33 billion to fund-of-funds. In fact, to ease the process of VCs raising capital from such initiatives by government, the Startup India Fund is also planning to launch ‘automation’ by next financial year. However, the initiative has faced criticism because of the <a href="https://www.businessinsider.in/the-indian-government-may-roll-back-a-tax-on-angel-investments-that-is-said-to-be-hurting-the-countrys-startup-ecosystem/articleshow/67177981.cms">‘angel tax’</a>, which applies to startups that were formed before 2016. Recently, India’s Income Tax Department issued notices to nearly 150 fresh startups. In response to the aggressive complaints, the government claims that they will not threaten startups to pay the tax. In all, it takes four-five months for a VC to apply and get funds approved from government — the government claims to trim it to two-three months with the introduction of automation. Meanwhile, the Indian government is said to be making it easier for the country’s startups to tap the Initial Public Offerings (IPO) market as an <a href="https://www.businessinsider.in/for-indian-startups-2018-has-been-a-year-of-bouncing-back-as-venture-capital-funding-doubles/articleshow/67286540.cms">alternative capital </a>source. Overall in 2018, <keyword id="982553" type="PERSON" weightage="20" keywordseo="Indian-startups">Indian startups</keyword> raised more money through fundings and financing via the venture capital route, beating other Indian companies that raised money via IPOs this year, according to data from research firm, VCCEdge. Under the venture capital funding, <a href="https://www.businessinsider.in/for-indian-startups-2018-has-been-a-year-of-bouncing-back-as-venture-capital-funding-doubles/articleshow/67286540.cms">India’s recent unicorns</a> raised ₹70 billion in its latest round of fundings from international investors such as Naspers and SoftBank among others. In fact, Swiggy entered the ‘unicorn club’ last year, accompanied by the homegrown food major, Zomato, which raised ₹13.99 billion from Alibaba Group’s subsidiary — Ant Financial Services. See also: <a href="https://www.businessinsider.in/for-indian-startups-2018-has-been-a-year-of-bouncing-back-as-venture-capital-funding-doubles/articleshow/67286540.cms">For Indian startups, 2018 has been a year of bouncing back as venture capital funding doubles</a> <a href="https://www.businessinsider.in/the-indian-government-may-roll-back-a-tax-on-angel-investments-that-is-said-to-be-hurting-the-countrys-startup-ecosystem/articleshow/67177981.cms">The Indian government may roll back a tax on angel investments that is said to be hurting the country’s startup ecosystem</a> <a href="https://www.businessinsider.in/indias-largest-online-learning-service-is-all-set-to-become-the-4th-highest-valued-indian-startup-with-a-254-billion-valuation/articleshow/66474294.cms">India’s largest online learning service is all set to become the 4th highest valued Indian startup with a ₹254 billion valuation</a>

The Indian government has reportedly invested just 19% of its fund dedicated to boosting startups

<ul><li><keyword id="982553" type="PERSON" weightage="20" keywordseo="Indian-startups">Indian startups</keyword> have raised more money through VC <keyword id="440371" type="PERSON" weightage="20" keywordseo="fundings">fundings</keyword> and financing, beating now listed companies that raised capital via IPOs this year. </li><li>While the startups raised nearly ₹449 billion in the <keyword id="6357097" type="DEFINITION" weightage="20" keywordseo="Venture-Capital">venture capital</keyword> (VC) funding rounds in 2018, nearly 25 companies listed on stock exchanges in India garnered ₹341.17 billion from investors. </li><li>Indian market regulator SEBI has been making amendments in regulations to provide <keyword id="6354763" type="UNKNOWN" weightage="20" keywordseo="ipo">IPO</keyword> as a substitute to VC funding for startups.</li></ul>2018 has turned out to be an eventful year for startup ecosystem. While several Indian startups are planning to tap the Initial Public Offerings (IPO) market as an alternative capital needs, they have already raised <a href="https://www.cnbctv18.com/market/data/indian-startups-raised-more-money-than-ipos-in-2018-1784121.htm">more money</a> through fundings and financing via the venture capital route, beating other Indian companies that raised money via IPOs this year, CNBC reported citing data from research firm, VCCEdge. Comparing the total amount <a href="https://officechai.com/startups/indian-startups-raised-money-indian-ipos-year/?utm_campaign=fullarticle&amp;utm_medium=referral&amp;utm_source=inshorts">raised by the companies</a> under the two segments — startups getting funding under the Venture Capital (VC) and other companies listed under IPOs — stats show that while the startups raised nearly ₹449 billion in VC funding rounds in 2018, nearly 25 companies listed on stock exchanges elevated with ₹341.17 billion from investors. In 2017, the companies listed under IPOs raised over ₹772 billion. On the other hand, the startup VC investments were found to be comparatively low, raising ₹243.47 billion. The biggest company under IPO, Bandhan Bank, raised ₹44.7 billion from investors this year. In fact, startups are forging ahead with nearly twice the Venture Capital ( VC) funding this year, as compared to 2017. Separately, the <a href="https://inc42.com/buzz/sebi-to-release-startup-listing-guidelines-by-january-20/">Security and Exchange Board of India</a> (SEBI) has recently floated changes in the existing regulations for the startup ecosystem. With this, the regulatory body is looking to provide IPO as a substitute to VC funding. However, the market regulator will release detailed guidelines by January 2019. It is also planning to launch a startup platform, with inputs from Bombay Stock Exchange (BSE), for its listing process across sectors — including Information Technology, e-commerce and biotech among others. ‘<keyword id="152045" type="ORGANIZATION" weightage="20" keywordseo="Unicorn">Unicorn</keyword> club’ India, which is the third -largest for startup ecosystem in India, <a href="http://v">added 8 new unicorns</a> to the list this year, adding up to 18 in total. Private companies with a valuation over $1 billion are the ones making to a ‘unicorn club’. Under the venture capital funding, India’s recent unicorns raised ₹70 billion in its latest round of <a href="https://officechai.com/startups/indian-startups-raised-money-indian-ipos-year/?utm_campaign=fullarticle&amp;utm_medium=referral&amp;utm_source=inshorts">fundings from international investors </a>such as Naspers and SoftBank among others. In fact, <keyword id="6358977" type="UNKNOWN" weightage="20" keywordseo="swiggy">swiggy</keyword> entered the ‘unicorn club’ just this year, accompanied by the homegrown food major, <a href="https://www.businesstoday.in/current/corporate/newest-desi-unicorn-on-the-block-is-zomato-just-raised-usd-200-million/story/269566.html">Zomato</a>, which raised 13.99 billion from Alibaba Group’s subsidiary — Ant Financial Services. See also: <a href="https://www.businessinsider.in/indias-largest-online-learning-service-is-all-set-to-become-the-4th-highest-valued-indian-startup-with-a-254-billion-valuation/articleshow/66474294.cms">India’s largest online learning service is all set to become the 4th highest valued Indian startup with a ₹254 billion valuation</a> <a href="http://v">The Indian government may roll back a tax on angel investments that is said to be hurting the country’s startup ecosystem</a> <a href="https://www.businessinsider.in/indian-food-delivery-unicorn-zomato-to-expand-footprint-to-30-more-cities/articleshow/66915630.cms">Indian food delivery unicorn Zomato to expand footprint to 30 more cities</a>

For Indian startups, 2018 has been a year of bouncing back as venture capital funding doubles

A report from VCCEdge, the financial research platform of the VCCircle Network, has said that this year would see as many as 1,000 <keyword id="428085" type="UNKNOWN" weightage="100" keywordseo="start-ups">start-ups</keyword> being funded, however, the deal sizes would be much smaller if compared to the hyper funding that start-ups have received in recent years. 
 
The report says that the year has already seen 255 deals, and this rate hints that the number of start-ups being funded this year would reach the 1,000 mark. 
 
However, a look at the worth of this deals tell that the $301 million that start-ups have received so far this year have is 50% less than the funding received in the same period a year ago. 
 
"The deals data indicate that investors are clearly waiting on the sidelines by consolidating their existing portfolios and looking at only meaningful ones in those ventures with strong fundamentals and a good revenue earning model," Nita Kapoor, Head (India) New Ventures, News Corp, and CEO, The VCCircle Network, said. 
 
Kapoor also added that "the decline in series A deals or the first institutional level of venture funding for start-ups is particularly worrying, thereby making it essential for them adopt the strategy of 'Conserve and Grow'. 
 
<a href="http://www.indiafilings.com/learn/wp-content/uploads/2014/09/Angel-Funding-for-Indian-Startup.jpg">Image source</a>

A recent report says 1,000 start-ups will be funded this year, but the deal size may drop

India just had the most investment-starved second quarter since 2013. The total value of deals is down by 62% from $6.1 billion from the same period last year to $2.2 billion in Q2 CY16, according to News Corp VCCEdge. 
 
On a half yearly basis, <a href="http://www.businessinsider.in/searchresult.cms?query=Private+equity&amp;sortorder=effectivedate">private equity</a> deals slipped as much as much as 46% in the first half of this year. Only 643 <keyword id="34499" type="POSITION" weightage="80" keywordseo="private-equity">Private equity</keyword> deals were cracked, worth over $5.8 billion. The deal volume also slipped by 13% from 737 deals last year. While the number of deals are up in Information Technology, the total value has come down a bit from last year. 
 
Interestingly, 2016 saw an uptake in <a href="http://www.businessinsider.in/searchresult.cms?query=angel+investments&amp;sortorder=effectivedate">angel investments</a>. Seed and <keyword id="1848628" type="UNKNOWN" weightage="80" keywordseo="angel-investments">Angel investments</keyword> grew by 16% to 368 deals in the January-June period this year from 317 deals a year ago. The total deal value, however slipped by 25% to $100 million from $134 million. This suggests risk aversion and more judicious funding calls by investors. 
 
Venture and late stage capital declined significantly. The figures are down by 55% in the first half of this year. The deal volume has also slipped 44%. 
 
The rush of capital for Indian startups began way back in 2014. <a href="http://www.businessinsider.in/searchresult.cms?query=Flipkart&amp;sortorder=effectivedate">Flipkart</a> raised a whopping $1 billion in July 2014, and after Chinese e-commerce giant <a href="http://www.businessinsider.in/searchresult.cms?query=Alibaba&amp;sortorder=effectivedate">Alibaba</a> successfully listed its stock in the US markets, <a href="http://www.businessinsider.in/searchresult.cms?query=e-commerce+startups&amp;sortorder=effectivedate">e-commerce startups</a> across the world got a boost globally. <keyword id="163404" type="COMPANY" weightage="40" keywordseo="Softbank">SoftBank</keyword>, which benefited from Alibaba’s IPO lavished attention to what it thought were promising Indian startups. 
 
With a couple of failures, and the financial downturn, the mood has changed A handful of hedge funds are now making new investments. The global internet investors like <a href="http://www.businessinsider.in/searchresult.cms?query=Softbank&amp;sortorder=effectivedate">Softbank</a> and <a href="http://www.businessinsider.in/searchresult.cms?query=DST+Global&amp;sortorder=effectivedate">DST Global</a> are however quieter. 
 
<a href="http://wallpapercave.com/wp/kFWtfAJ.jpg">Image Source</a>

India's Startups just had the worst second quarter since 2013

<a href="http://www.businessinsider.in/searchresult.cms?query=Sequoia+Capital+India+">Sequoia Capital India</a> is ready for an aggressive pace of investments in the country. The <a href="http://www.businessinsider.in/searchresult.cms?query=v">Silicon Valley</a>-headquartered <keyword id="6357097" type="COMPANY" weightage="80" keywordseo="venture-capital">venture capital</keyword> firm is planning to raise about $800 million (about Rs 5,000 crore) for a new fund. 
 
The $800-million fund will be the largest <a href="http://www.businessinsider.in/searchresult.cms?query=Venture+Capital+">Venture Capital</a> fund for India, and one of the biggest in the venture and growth capital category in recent years. 
 According to two people familiar with the development, the fund raising process is expected to begin in 6-12 months and is likely to be closed in quick time, "as is the norm with <keyword id="270604" type="ENTERTAINMENT" weightage="100" keywordseo="Sequoia">Sequoia</keyword>". 
 
Sources who knew about Sequoia's plans for a new fund said the venture capital firm may begin approaching limited partners, industry parlance for investors in these funds, as early as October. 
 
The VC firm has nearly $2 billion under management and the new fund will make Sequoia, already a highly influential investor, one of the largest private equity and venture capital managers as well. 
 
One person familiar with the plan said: "One idea behind such a large fund could be to counter the influence of Tiger Global, which will be good for the ecosystem." 
 
Let’s know what experts has to say about Sequoia’s aggressive plans: 
 
1. The VC firm has the ability to invest: Its move to raise such a large fund in quick succession will signal to entrepreneurs the firm's ability to invest across early and late-stage deals, said industry experts. In the past year, several hedge funds have entered India and firms like <a href="http://www.businessinsider.in/searchresult.cms?query=Tiger+Global+Management+">Tiger Global Management</a> have been aggressively investing in early-stage deals. 
Sequoia Capital has been aggressively backing mid to late stage startups after it unveiled a $530-million fourth India-focussed fund in May 2014, nearly six years after it raised its previous corpus of $725 million in August 2008. Sequoia topped up its fourth India fund with another $210 million earlier this year. "They don't have fund cycles like normal VCs," said a Bengalurubased venture capital investor, adding that the typical cycle between successive funds is 3-4 years. 
 2. Sequoia has participated in at least 80 deals: It has participated in at least 80 deals worth over $1.7 billion since the beginning of 2014, according to data from VCCEdge. It participated in the $100-million round raised by budget stay startup <keyword id="2550719" type="UNKNOWN" weightage="80" keywordseo="OYO-Rooms">OYO Rooms</keyword>, the $90-million round of healthcare app Practo, and the $80-million round of digital payments firm <keyword id="6377963" type="UNKNOWN" weightage="100" keywordseo="Freecharge">FreeCharge</keyword> (which has since been acquired by <a href="http://www.businessinsider.in/Sounds-cool-Smart-Cities-to-also-become-the-safest-in-the-entire-country/articleshow/48867219.cms">Snapdeal</a>). "Sequoia has been able to balance its investments in newage businesses and older businesses in areas like life sciences (and) consumer quite well. Also, they have been one of the most prolific investors in terms of ability to get an exit," said <keyword id="225165" type="PERSON" weightage="80" keywordseo="Sanjeev-Krishan">Sanjeev Krishan</keyword>, transaction services and private equity leader at PwC India. 
 Since last year, the VC firm has closed more than half-a-dozen investments in the life sciences space, including in Koye Pharmaceuticals, Curatio Healthcare, La Renon, MedGenome Labs, Akumentis Healthcare and Innovcare Lifesciences. Sequoia has also been actively investing in <keyword id="53564" type="UNKNOWN" weightage="60" keywordseo="Southeast-Asia">Southeast Asia</keyword> from its India fund, where it has closed nearly a dozen funding deals, including in Tokopedia, mobile marketplace Carousell and analytics platform Appier. 
 
(Image: Indiatimes)

Know how Sequoia is going to become the largest India-focussed Venture Capital fund

India is a rich admixture of some of the world’s most brilliant, creative and technical minds, who have all the capabilities and potential to create the next Google or the next biggest innovation driven global company. 
 
India is a battery of venture capital firms, which are making a beeline to capitalize on the growth story but will creating a Google in India be a reality? May be, or maybe not. 
 
An eternal optimist would always search for the light at the end of the tunnel. An inveterate pessimist would see that as the light of an on-coming engine, while an unassuming realist would search for his torch light to make his way through the darkness. 
 
Sunny Side up 
 
Keen observers of the startup space in India fall under these three categories. As someone who heads a startup in the fin-tech space and serves as a mentor to upcoming startups, I am bound to don the hat of someone who sees developments in this space ‘Sunny side up’. The numbers justify optimism. With more than 4,200 new-age companies, India has overtaken Israel to grab the third position among global startup ecosystems, behind US and the UK. A report by NASSCOM, startups have created more than 80,000 jobs so far and can create 2,50,000 jobs if their number balloons to 11,500 by 2020. 
 
There has been no dearth of funding with VCCEdge data revealing the tripling of angel and seed investments from $30 million in Q3 CY2014 to $94 million in Q3 CY2015. Add to it, the ‘Startup India, Standup India’ slogan coined by Prime Minister Narendra Modi has led to States like Telangana, Rajasthan, Uttar Pradesh and Karnataka competing to develop startup policies and offer infrastructural support like that of incubators and co-working spaces. 
 
But the reality is… 
A study conducted by Kauffman Foundation in 2012-13 observed that 33.2% of co-founders of tech firms founded by immigrants in the US were Indians. While we take pride in the fact that the CEOs of global behemoths such as Google, Microsoft and MasterCard, among many others, are Indians who migrated to the US, we should really be asking ourselves if they would have reached the pinnacle of their career had they stayed in India and started something of their own. 
 
India is being ranked 130 out of 189 countries in the ease of doing business index which validates the quote by Chairman Google Eric Schmidt “Problem is not with Indians, but with India.” What are the ground hurdles that are resulting in a prospective Indian Google being nipped in the bud and a possible Brain Drain 2.0? 
 
The need for an Innovation Ecosystem 
It all starts with the education system, which has given birth to technical geniuses albeit via rote learning. It is a system that does not encourage failure which then seeps into societal norms of measuring success on the parameters of the education degrees one holds and the monthly salary that gets credited. Innovation needs minds that are receptive to knowledge and are unhindered by socio-economic constraints. 
 
Till the time this change in mindset comes about, college drop outs or those who sit out of B-school placements who venture into entrepreneurship to set up the Indian Google will continue to be seen as failures and this places a very high emotional burden if there is no family backing. 
 
Difficulties in setting up shop 
If an Indian Google were to open shop in India, the bureaucratic procedures from getting the company name registered, to the tax regulations, every procedure will take weeks when compared to a few hours in developed markets. All this administrative hassle is bound to consume at least 20% of founders’ time and efforts. 
 
Regulatory hurdles while raising money and doing business 
To raise various rounds of funding, co-founders of India’s Google would first need to get a Chartered Accountant or a Merchant Banker to issue a valuation certificate. The equity premium will be considered as income in the company and hence be made liable to pay income tax. And there is a clause that makes the promoter(s) liable to pay a fine of a minimum of Rs 2 crore or the investment amount; whichever is higher in the event of any inadvertent mistake is something that merits urgent attention. 
 
If venture capital is raised from investors abroad, the promoters have to contend with a host of RBI compliances, FEMA regulations besides the ROC regulations. They will not be allowed to communicate to the RBI directly, but go through authorized dealer bank. The RBI, however, can send them direct notices. 
 
For international sales, the company may opt for a set up in a Special Economic Zone (SEZ) or Software Technology Park (STPI). If it chooses operations in an SEZ, every single foreign invoice will need to be reported to the SEZ along with full detailed paper work. For their domestic sales, the company runs the risk of being asked to invoice domestic clients in dollars, thereby throwing a spanner in the works and forcing it to either consider moving out of the SEZ or opening another unit for domestic sales. 
 
Difficulties in scaling up 
Like most early stage businesses, India’s Google will have to start with smaller clients who will ask for free trials, customizations and white labeling/exclusivity. It will be made to negotiate contracts at the lowest price until its differentiation is truly innovative and not replicated by fellow competitors. Failing which, it would take years for it to break even and step up to larger clients with a higher ticket size. 
 
No company can scale up without a pool of talented human resources. While it is easy to get cost efficient talent in India, it is a colossal task to hire and retain the best talent. While 12 million people join the workforce every year in India, a FICCI-E&amp;Y Survey (2011) revealed that it is only 25% who are considered “employable”, and possibly less than 1% may have what it takes to be at Google. 
 
With high rates of attrition in the technology space, India’s Google will need to ensure no employee takes away the company’s IP to a competitor. Given that such breaches are not very well defined in the legal system and that securing patents is a challenge (About 2.46 lakh patent applications and 5.32 lakh trademark registrations are pending with the government due to shortage of manpower), this is another loophole needs to be plugged. 
 
During the scale up of operations and businesses, the directors of growth stage firms are highly likely to be summoned by various authorities (Income Tax, etc.) for explanations of their profits, losses, which are likely to be all clean banking transactions. Such harassment is common and disheartening for most Indian entrepreneurs. 
 
Startup Act 
In an attempt to improve the ease of doing business for startups, there is talk of a 2-page Startup Act that will distill and simplify 22 different laws together. 
 
While I sincerely hope it works, I wonder why we have distinct 22 laws in the first place. Why don’t we simplify and rationalize the business environment for all? Is it even possible to distill 22 laws into 2 pages? 
 
In a nutshell 
All the above highlighted issues are a few examples of a complicated working environment in India. While our government campaigns worldwide for companies to come and “Make in India”, we are seeing many startups goaded by VCs to move their setup outside India to a country with a more predictable regulatory regime in order to parry the problems discussed above (example Flipkart, Grofers etc.). This coupled with public listings of Indian companies in foreign exchanges had led to a loss to India’s exchequer (example MakeMyTrip). 
 
The pessimist in me believes that even after 20 years, the search for India’s Google will not be successful. The optimist in me does sees the potential and promise in the regulatory reforms which are afoot, while the realist in me makes me see every day as an opportunity to ideate and create something new – with a bit of Jugaad, a step to create something cutting edge. 
 
As the saying goes, “it’s never as good as you want it to be, but never as bad as it seems”. 
 
(Kunal Nandwani is the Founder and CEO of uTrade Solutions)

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