Indian Internet Startups Face Money Crunch


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Investors’ enthusiasm for Indian startups continues to wane.

Private-equity and venture-capital funds raised by Internet companies in the world’s second-most-populous country fell 56% to $528 million in the three months ended June 30.

That is a sharp drop from the $1.19 billion raised in the previous quarter and $1.3 billion a year earlier, according to a research report from Jefferies India.

The data confirms “a trend that has been anecdotally reported for many months now,” wrote analyst Arya Sen.

Seeking to gain a foothold in India’s growing internet economy as more and more people come online for the first time every day, investors like Softbank Japan, Tiger Global Management and Sequoia Capital have pumped funds into e-commerce startups such as Flipkart and Snapdeal, along with companies like ANI Technologies’ Ola, an Uber competitor.

With funding slowing, e-commerce firms are now concentrating on becoming profitable rather than merely growing, Mr. Sen wrote, noting that companies aiming to raise more than $100 million are encountering especially significant challenges.

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