Funds raised by Internet companies fell to 3-year low: Jefferies

New Delhi: Private funding raised by internet companies in India fell to a three-year low last quarter (ending December), with less than $300 million being raised, a report released by Jefferies said here on Monday.

“Private funding raised by internet companies slowed further in the December quarter to the lowest since June 2013 quarter at less than $300 million, continuing with the trend observed for 2016 when funding declined over 50 per cent to $2.7 billion versus $5.8 billion raised in 2015,” the report said.

While e-tailing continued to account for the largest share of fund raising, its share continued to shrink from a peak of 74 per cent of the total funds raised in 2014 to 37 per cent in 2016.

“Segments which gained share included travel (Makemytrip, Ibibo, Yatra all raised funding this year), services (Byju), social network (Hike), classifieds (CarTrade) and fin-tech (Mobikwik),” the report said.

Regarding 2017 outlook, Jefferies said increased focus on profitability and consolidation were two key themes that played out in the Indian internet sector over the last 12 months and it expects these to continue in 2017.

“We expect some down-rounds this year following up to news flow on valuation markdowns last year. Fin-tech companies are likely to see momentum and attract more funding as a positive fall-out of demonetisation.

“Online/digital content (entertainment, education) would be the other area to look out for this year. With increasing 4G penetration, falling data tariffs and the entry of large players like Netflix, Amazon Prime Video and Reliance Jio’s bouquet of content apps, the enabling infrastructure seems to be falling in place,” the report added.