Investments in Indian start-ups have decreased by about 24 percent in the January-March quarter of 2016 over the September-December quarter of 2015 as wary investors started pulling back amid concerns about the losses incurred by start-ups, high valuations and a slowing world economy.
According to a joint report by KPMG and CB insights, investors have injected about $1.15 billion into start-ups during the Jan.-March quarter of 2016. This marks a 24 percent decline over the previous quarter. Notably, investments in the Sep.-Dec. quarter fell steeply by 48% over the preceding three months.
"With mounting investor hesitation and concerns of overvaluation, Indian investment continued to decline in the first quarter," KPMG and CB Insights said in the report, the Mint reported.
Some of the biggest deals witnessed in the January quarter include Big Basket raising about $150 million; Shopclues, which received an additional funding of $150 million; and Snapdeal managing to pull about $50 million.
Losses incurred by start-ups and the slowing economic growth in China have left investors worrying about whether to pump in money or hold back cash. Additionally, investors have also started withdrawing investments in some of the start-ups.
Since 2014, venture capitals and private equities infused over $9 billion in Indian start-ups.
Interestingly, bigger players too are feeling the heat as investors wait and watch. According to another report by the Mint, about 15 investors, with whom Flipkart held talks over the past six months over raising funds, refused to infuse fresh money in the online retailer citing its high valuations of approximately $15 billion.
Similarly, several new investors also rejected Snapdeal's current valuation of around $6.5 billion and declined to put up money.
"We have not been in contact with investors to raise funds but the sense we are getting is that there is a wait-and-watch situation that is going on. There is definitely lesser investment in early-start-ups when compared to the last 4-5 months (the number of) deals have certainly reduced," Ashish Goel, chief executive at on-line furniture retailer UrbanLadder, was quoted as saying by the Mint.
The report further added that investors expect the funding environment to remain depressed for some time to come.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]