Q2 Report (July 2018 - Sep 2018)

Our Startup Team analyzed 1000+ fundraising and 73 funded companies to create the Q2 Report for July - Sep 2018. The average size of funding this quarter was $668k, 5.52% higher than the last quarter’s $633k. And the number of deals in Q2 fell by 16.09% from 87 in Q1 to 73 in Q2.This report delivers insights into the:

• Percentage distribution of sectors funded
• Demand-Supply percentage gap of funded and fundraising
• B2B and B2C fundraising trends
• Correlation between the location and fundraising trends for startups

Sector[caption id="attachment_57454" align="aligncenter" width="474"]

Sector Analysis[/caption]The pie chart represents the percentage distribution of the top 17 sectors which were funded. A few observations are:

• Retail, AI, Consumer Goods, Enterprise Software, Information/Tech, were the top funded sectors for Q2.
• Retail emerged as the most funded sector, saw multiple investments happening in startups offering consumer products like fashion wears, sunglasses, made to measure women wear, tea-coffee joints, healthy snacks, non alcoholic drinks, corporate gifting, bamboo (natural material) based footwear for sports, Automotive service, parts retail, and other investments were in AR/VR products for retail stores, Medical Devices Retail, Corporate giftings, Online Retail Discount Coupons, Online ordering - food ordering, travel bookings, grocery, laundry, cakes, flowers and gifts, repairs and home service etc.
• AI, saw investment in platform engineered for business professionals (offering data cleaning, machine data learning, programmatic analytics), human emotions and context tracking application for brain war mapping, facial coding, object detection etc. food science and behavioural analytics for the online food industry, intelligent underwriting platform for a) e-commerce purchases related credit, by analysing buying patterns, digital footprint and device information and b) P2P lending algorithm providing quality credit for everyone at attractive interest, through risk-adjusted returns for the investor by enhancing credit risk management. Other investments include news app using NLP to auto-populate answers to pre-defined questions.Underwriting, the point of care screening and diagnostics provider of non-invasive detection of diseases like tuberculosis and MDR detect for diabatic detection, English language learning powered by speech recognition technology and also focuses on vernacular languages, personalizes the learning experience for kids, intelligent SMS inbox.
• Enterprise Software, saw investments in SaaS platforms for the logistics industry to enable automation and boost efficiency, business-to-business (B2B) enterprise for mobility, sales CRM and sales analytics for each sale, doctor-patient engagement application, SaaS, machine data learning, data cleaning, programmatic analytics, a PaaS platform for SMEs and startups to develop apps for the web and mobile, a solution with IP in the area of discovery, normalisation of security postures, and translating them across various dimensions like cloud, devices and various templates, a hospital linked integrated child health record cloud automating child’s vaccination record, crucial growth parameters in real time from birth to 18 yrs of age, SaaS platform for machine data learning, data cleaning, programmatic analytics, etc. for banking, BFSI and retail sectors & tool for the executive team to get a pulse of their employees on a daily basis.
• Information/Tech (search), saw investments in discovery (doctors, health care services at home) and booking (bed in hospital, second opinion), retail stores search (apparels, accessories, home decor etc) and also offers discounts and reward points, Bollywood and fashion news platform, platform for matchmaking buyers and sales for a property and platform for identification of safe tours for female foreign travelers by teaming them up with women tour guides, platform connecting athletes with resources (sponsors, experts, coaches, academics, specialists etc.), platform connecting casting directors and aspiring actors and two investments in platforms discount coupons for shopping sites, users can locate discount and redeem them.
• FinTech, saw investments in P2P lending space for nonsalaried and self-employed individuals. Startups offerings loans in education, medical, creative and innovative projects space, online shopping - buy now, pay later products, B2B insurance offering (policy vault creation for org. employee to get maximum benefits from existing policies), social impact products like digital financial service platform offering tailored financial solutions for hearing handicapped (HH) incomes

[caption id="attachment_57442" align="aligncenter" width="472"]

Demand and Supply analysis[/caption]Further on, we compare the percentage of companies on the fundraising and funded side. Blue bars show the percentage of companies raising funds. And, the red line shows the percentage of companies funded in each sector. Here are they highlights:

• Real Estate, Hardware, Logistics have been quite balanced.
• Retail, Information/Tech, Communication, Sports saw more supply than demand.
• Education, FinTech, Healthcare, F&B, Media & Entertainment, Fashion saw more demand than supply.
• Healthcare saw investments in online doctor-patient engagement applications. Also, investments were made in platforms for medical loans for common surgeries including orthopaedic, cardiology, transplant etc. Investors also showed interest in platforms offering services like lab tests, medical equipment on rent and sale. Platforms that offer imaging services like MRI, CT scan, x-ray, ultrasound etc. also got attention. Some companies as point of care screening and diagnostics provider of non-invasive and proactive detection of diseases came to limelight. And, startups focused at development and application of cutting-edge informational and computational technologies got funded. Practice of medicine in the neonatal intensive care unit, manufacturing and commercialisation of biomaterials and medical products was appreciated too.
• Education, saw investments in learning activity based boxes (children b/w 2 to 8 yrs) on subscription basis containing projects, games, do-it-yourself projects and a storybook, hybrid tutoring platform for school students which connects students with private tutors, online language learning platform, Android based laptop for education, platform offering educational loans from lenders for courses such as business analytics and machine learning certification etc.

Market type of companies[caption id="attachment_57446" align="aligncenter" width="547"]

B2B vs B2C[/caption]Around 64.47 percent of the companies that got funded in Q2 were B2C which is 12.18 percent higher than previous Quarter, while 35.52 percent of the companies were B2B, which is 16.46 percent higher than the previous quarter.More companies are getting funded in B2C due to retail, information/tech and consumer goods verticals.Location[caption id="attachment_57447" align="aligncenter" width="478"]

Location-wise analysis[/caption]65.75 percent of the startups which raised funds were in T1 city, 10.6% less than previous quarter. A possible reason is emergence of startups offering consumer goods retail and focusing on Tier 2 underserved population. This would allow faster market adoption rate for their products. No startup from T3 received funds this quarter as compared to 3.55% in the last quarter. This indicates the preference of founders to acquire more easily accessible internet users from Tier 1 and 2. Additional insights Enterprise Software, Healthcare, FinTech, Education have remained amongst the most funded sectors. In Q2 FY 2018-19, retail and consumer goods became the most funded sectors. This indicates a possible shift on the demand side (consumers) who are now more health conscious and are willing to explore newer healthier alternatives to a traditional food item, want more variety for their fashion needs and preferring eco-friendly products. The rise in B2C retail startups can be attributed to rising internet adoption in Indian population, which stands at over 460 million internet users (an increase of ~ 24% from 2016), which ensures easy access to innovative products and at the same time allows the startup to reach directly to customer which also owing to huge improvements in logistics sector (first mile, last mile delivery) is faster and cheaper than ever before.Click on this link for more blogs by LetsVenture!