Money is drying up for start-ups and latest numbers from VCCEdge confirm the fact. Startup funding activity slowed down drastically with deal-making slipping 47.45% compared to first quarter of calendar year 2016. After frenzied funding rounds in 2015, investors are becoming cautious about pumping money into start-ups with the reason being that they themselves are finding it difficult to raise funds. Also, majority of the start-ups are bleeding, burning cash without any profitability in sight.
Consolidation among start-ups therefore is going up. M&A deals in the startup space witnessed a 75% jump quarter on quarter. Acquisition of Citrus Payments Solutions ($130mn), One Mobikwik ($41mn), ZipDial Mobile Solutions ($31mn) and Local Cube Commerce ($16mn) are amongst the top M&A deals.
Fintech has been the most attractive sector for start-ups while travel tech and food tech are witnessing falling number of deals. Fintech with 11 deals worth $18.5 mn, Food Tech with 8 deals worth $11.1 mn, Travel Tech with $11.3 mn from 4 deals, Health Tech with $8.43 mn from 10 deals and Real Estate Tech with 2 deals worth $10 mn were the top sectors that attracted investor interest.
Investors are increasingly showing preference for late stage funding, suggests the data. Angel and seed investments fell both in volume and value terms with deal volumes reduced to half with 120 deals in first quarter of calendar year 2017 in comparison to 245 deals in the same period last year . Series A funding declined 65% in deal value on a Y-o-Y basis.
