Startup news: Startup Funding down by 29% in First half of 2020

Startup funding in India dropped by 29% in the first half of 2020. In 2019 the first half, the total funding raised by Indian startups was $5.9Bn as compared to $4.2 Bn in the first half of 2020. 

This drop is largely due to the impact of the coronavirus pandemic, according to the data by venture capitalist industry tracker Tracxn.

Only 443 startups were funded from Jan to Jun this year as compared to 725 startups in the comparable time period last year. Alternative lending, payment, and test preparation tech generated a lot of talk and funding among the investors, as per Tracxn.

Although economic uncertainty due to COVID19 is the key reason for this drop. Other factors like the India-Sino conflict cannot be ignored. The recent diplomatic friction has had its share of impact on Indian startups from Banning of Chinese apps to the launching of new apps by Indian companies to Freezing of funds by Chinese Investors.

In the alternative lending segment, total funding of $704.5 Mn was raised, up by 67% from the last year. 

A total of 3 companies entered the Unicorn club this year Nykaa, First cry, and Pinelabs as compared to 6 last year.

VCs and investors in India have been constantly warning Indian Startup founders to control their costs and do a calculated expansion to work on profitability.

Refrens.com’s thoughts on this

Although the situation is not as good as it was expected to be, as entrepreneurs we have to take it in our stride and make the best out of it. We recommend startup founders to iterate on their products and business model to see newer opportunities, make your product better, and look out for new sources of competitive advantage. It is also imperative at this stage to look at your costs and cut any flak if so.

Other important business news for MSMEs, Startups, and Freelancers in  the week gone by

• Can’t rely on foreign investors. India must become aatmanirbhar in startup financing. Read more about it here.

• Back from the brink: Unlock 1.0 puts MSMEs back on a recovery path littered with manpower, capital issues. Read more about it here.
• SBI readies Rs. 1000 crores B2B e-market only for MSMEs. Read more about it here.

Our blog “How to land deals during these times?” is a good read to do at this time. Read it here.