Bengaluru, July 5 (IANS) Fund raising in the Indian e-commerce sector declined 50 per cent in the April-June quarter over the same period of last fiscal, investment bank and securities firm Jefferies Group said on Tuesday.
“Private funding in the Indian e-commerce sector has declined 50 per cent on yearly and quarterly basis, confirming the downward trend over the months,” the American firm said in a report.
Barring leading hotel rooms’ aggregator Oyo, which raised $100-million in April, there were fewer large transactions, indicating a slowdown in private funding in the emerging sector.
Data shows fund raising declined sharply to $500 million in the quarter (Q1) under review from $1 billion in the like period over the last two fiscal years, Jefferies said.
Oyo raised its equity fund from SoftBank, GreenOaks Capital, Lightspeed Venture Partners and Sequoia Capital.
Observing that challenges were greater for larger firms looking for raising $100 million, Jefferies equity analyst Arya Sen said the revenue growth for Just Dial would be key for fund raising for start-ups and entrepreneurs.
“In response to the slowdown in funding, there has been a shift in focus to profitability by the larger e-tailers over the last 6-9 months from growth and general merchandise volume (GMV),” Sen recalled.
“Though most e-commerce firms are targeting to break even over the next 12-24 months by reducing discount, change in mix towards profitable categories and customers, change in strategy and loss of market share to the global e-tailer Amazon have slowed growth for many,” the report pointed out.
Funding into travel suggests that high burn will continue for MakeMytrip despite an overall slowdown in the category.
“Funding into travel space has remained strong with Goibigo, Oyo, Stayzilla and Fab Hotels raising money in the last five months,” the report noted.
Global multinational internet and media group Napsers is reported to have committed $250 million to Goibibo.
Jefferies expects 15 per cent revenue growth for Just Dial, with contribution from JD Omni, though its management indicated a gradual return to 20 percent revenue growth in this fiscal (FY 2017).
“Traction from JD will be key to look out for Just Dial guidance of 25,000 customers by this fiscal end and 10 per cent revenue growth contribution from Omni,” the report added.