Our Startup Team analyzed 1000+ fundraising companies and 55 funded companies to create the 3rd Quarter Report for the financial year 2017 – 2018 (Oct – Dec, 2017). The average size of funding this quarter was $618k, 9% lower than the last quarter’s $680k. And the number of deals this quarter fell by 16.7% as well.
The report delivers insights into:
- The distribution (in percentage) of sectors that have been funded
- The demand-supply gap b/w fundraising and funded companies (in percentage)
- The B2B and B2C fundraising trends
- The correlation between the location and fundraising trends for startups
The pie-chart here shows the distribution of top 20 sectors (by the number of deals) which got funded. A few observations here:
- Enterprise Software, Education, FinTech and Healthcare are the top funded sectors for Q3. Retail, Transportation, AI and Information/Tech are the other four sectors which have seen a high number of deals. Note that market leader position was retained by Enterprise Software as was the case in Q2 2017 – 18, Q4 2016 – 2017 and even before that.
- Education moved three positions up to the second position, pushing Healthcare and FinTech downwards. While Healthcare moved to the fourth position from second in Q2, FinTech retained its position at number three as was the case in Q2
- Retail was the fourth most funded sector in Q3, after seeing a shift from low funded sectors in Q1 to the second most funded sector in Q2. AI slipped to the fifth position though the number of deals has improved. IoT still remains one of the least funded sectors in Q3 as was the case in Q2 and Q1
- FnB, which saw a blip in Q1 in terms of the number of deals, has been one of the least funded sectors in Q3, as was the case in Q2.
- Transportation has emerged as the fourth most funded vertical, owing to increase in the number of deals in rental/sharing economy startups within this space.
Next, we compare the percentage of companies on the fundraising and funded side. Blue bars show the percentage of companies raising funds (scale is the left y-axis) while the red line shows the percentage of companies funded in each sector (scale is right y-axis). Here is what we think:
- Healthcare, AI, Media & Entertainment, Communication, Fashion and IoT seems fairly balanced as of now. While the rest of sectors have seen an imbalance in supply and demand.
- Vernacular content & video content platform, storytelling platform, AR/VR content startups had investments this quarter which helped Media & Entertainment get to the fifth position.
- Retail, Information/Tech, FnB have been the toughest sector in Q3, where there was huge demand but low supply.
- More supply than demand was seen in sectors like Enterprise Software, Education, FinTech, Transportation, Real Estate, Big Data, Careers, Security, Gaming.
- The rise of Transportation can be attributed to an increment in funding of startups dealing with IoT and SaaS-based transportation platform, self-riding bike rental program, bike and taxi pooling online platforms, bicycle sharing platform etc.
- Enterprise Software saw investment in enrolment management systems, cloud environment solutions, e-commerce enabler platform, data analytics & reporting, learning management system.
- Education claimed the second slot in overall deals and saw investments in collaboration/technology platform, tutorial marketplace, mobile learning management platform and solutions for visually impaired.
Market type of companies
Around 65.46 percent of the companies that got funded this quarter were B2C which is almost same as that of Q2, while 34.54 percent of the companies were B2B. The 30% difference b/w B2C and B2B getting funded can be attributed to the rise of technology companies in the consumer internet space, retail, transportation.
74.54 percent of the deals happened in Tier-1 cities, which was on the lower side as compared to Q2’s 78 percent. Interestingly, 18.18% of the fundraising happened in Tier-2 cities which was slightly less than the 20% mark of Tier-2 deals from Q2. Whereas 7.27% of deals happened in Tier-3. We might see an increase in the number of fundings happening in T2 and T3 cities owing to a new trend of startups building for India 2 and local startup ecosystem being built.
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