EVEN AS the past two years proved to be dampening for the startup sector across the country with a marked drop in the companies starting up, Mumbai has emerged as the second favourite for investors.
Startups in the city raised funds worth USD 609.3 million in 146 rounds in 2017, second highest after Bengaluru (USD 852.7 million in 261 rounds), according to data received from Tracxn Technologies Pvt Ltd, a data analyst firm that tracks startups. Investors looked at Mumbai more keenly than at Delhi, which saw a 3 per cent drop in fundings last year compared to 2016. Gurgaon startups raised the third highest funds – USD 517 million.
Interestingly, Pune startups, which saw a 104 per cent jump in fundings in 2016, received the fifth highest fundings at USD 127.9 million, a drop of 12.6 per cent since 2016.
“When it comes to tech hubs, many entrepreneurs think they need to be based in Bengaluru in order to thrive. Mumbai is often a city that gets overlooked by tech founders in the startup scene. There is a renewed energy present throughout Mumbai and the entire region that is making Andheri-Powai a tech mecca in its own right. There are over seven large incubators and over 10-odd small ones. Within the Indian Institute of Technology, Bombay, there is never a dull moment in the startup ecosystem. Angel Investors are taking an interest in local startups and it’s paying off. Women founders are major players in the Mumbai startup ecosystem,” said city-based angel investor Sanjay Mehta.
In comparison, the number of new startups was significantly low. Only 151 new ones came up in the city in 2017 compared to 885 in the year before. Last year’s lull in the startup sector did have a crucial effect on the funding scenario here as the amount was significantly lower than the past two years. Fundings in Mumbai startups had increased by 15.6 per cent in 2016 but dropped by 31.8 per cent last year. Among the top 10 cities in terms of funding, all except Noida saw a drop in funding. Noida saw a 63 per cent jump.
Healthcare and edtech have emerged as the most sought-after fields for investors. While healthcare saw a 410 per cent rise in funding in 2017, edtech startups saw a 97 per cent rise compared to the year before. However, while edtech and healthcare startups did better comparatively, consumer-based and fintech startups raised the highest funds last year with USD 187 million and USD 169 million, respectively.
Mehta attributes high interest of investors in the fintech sector to the proximity of the city startups to the stock exchange. “Mumbai is the financial capital with both stock exchanges headquartered here and a host of BFSI enterprises makes it a breeding ground for fintech startups,” he said.