Slowing Economy Has No Effect on Startup Investment

The Indian startups are not affected by the economic slowdown as they continue to receive funding. The Indian startups have withstood against factors such as low consumption, fluctuating rupee, liquidity crunch, and the Sino-American trade war.

Halfway through 2019, the startup funding has recorded new levels and has already gone past the previous year’s peak. Investors with a large pool of capital are considering Indian startups. 

Until July 2019, a whopping USD 4.7 billion is invested in the Indian startups spanning over 346 pacts as against USD 4.3 billion in 338 deals in the same timeframe of the year 2018, as per the data from Venture Intelligence, data tracker of startups. 

In August 2019 so far, two deals worth more than USD 100 million are signed. Meesho, a social commerce based firm, has raised USD 120 million from South Africa’s Naspers. ShareChat, a social network, has managed to raise investment of USD 100 million from Twitter. 

The increase in the investment value might seem marginal, but it has come at a time when the market and economic conditions are not conducive for investment. Also, the rise in startup investment depicts that investors are hopeful of the Indian startups doing well amidst the unfavourable global factors.

Also Read: Startups: Can Social Media Marketing Change the Game?

The companies from the traditional sectors are not in much demand while the new sectors such as internet-driven companies, mobility, and so on are attracting the investors and hence, growing at a rapid rate. 

Numerous early-stage investors are on the verge of signing deals worth USD 350 million across different sectors this year. Increase in startup investment is a good sign for the Indian youth as job opportunities would be created. 

The economic slowdown has affected specific startup sectors such as lending. The liquidity crunch, which is prevailing since 2018, has hindered the lending ability of several startups, and they are striving to raise debt and equity since then. 

However, this drawback has not held India back as the worth of FinTech deals in India has exceeded that of China in 2019’s second quarter, and this is the first instance of India overtaking China in terms of FinTech deal volume.

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