'Delhi-NCR is most funded city for startups in 2016'

BENGALURU: Delhi-NCR has emerged as the most funded city in 2016, according to a report by startup analyses firm Tracxn. In the first six months of 2016, Indian startups raised $1.8 billion, out of which Delhi-NCR received $917 million. This was helped by $250 million and $200 million funding raised in February by Gurgaon-based Ibibo Group and Delhi-based Snapdeal respectively. Bengaluru

was the second most funded with $489 million, followed by Mumbai with $296 million.

Pune and Hyderabad took the fourth and fifth spots, with $59 million and $4.6 million respectively.

The country's capital also led in the number of deals (155). The average ticket size was $5.8 million.

This mirrors last year's results for the same period, when Delhi NCR had been the most funded city, having raised $1.1 billion with an average ticket size of $10 million. Bengaluru and Mumbai had followed with funding of $951 million and $490 million respectively.

The funding amount has significantly reduced this year.

In the first six months of 2015, startups in the top five cities raised $2.7 billion, a billion more than this year's figure. Out of top 10 funding rounds this year, six were raised by e-commerce companies, four of which were based out of Bengaluru.

"Delhi-NCR has a disproportionate number of ecommerce startups. E-commerce is a mature sector and most of these companies were raising later stage funding rounds," said Tracxn co-founder Neha Singh. "The other cities have more technology-centric startups."

However, the number of funding deals rose to 402, from 324 last year.

This signifies that the space is seeing a correction in the investment size and not in the general attractiveness of Indian startups.

Nitin Sharma, principal at venture fund Lightbox Ventures, said this was a good sign for the ecosystem since the angel, seed, pre-series A round funding flow is still healthy.

"A correction was bound to happen since the funding had expanded almost eight to nine times between 2013 and 2015, faster than what the ecosystem could absorb efficiently and sustainably.It's a good time to invest. Valuations aside, startups being built right now are more lean and mean, and hopefully more productUX (user experience) focused than discount-dependent. Of course, the near-term challenge has to do with laterstage rounds," he said.

In June, Lightbox Ventures had participated in a $30 million funding round for Gurgaon-based used car marketplace Droom.

The study finds that Ahmedabad, Chennai, and Jaipur are emerging as new startup hubs.

The three cities raised $34 million and accounted for 30 deals this year.