<article>Investors betting their dough on India&#8217;s over-hyped e-commerce sector are perhaps in for happier times if exit data is an indicator.</article>

Investors betting their dough on India&#8217;s over-hyped e-commerce sector are perhaps in for happier times if exit data is an indicator.
Exits, or liquidation events when investors reap return on their investments, have hit a three-year peak in 2016 even though overall fund-raising and deal volume have seen a remarkable slowdown.
Riding on the back of strong consolidation plays in the e-commerce space through M&amp;As and IPOs, exit events &#8211; according to data provided by startup tracker <a style="color: #000080;" href="http://dealstreetasia.com/tag/tracxn" target="_blank">Tracxn</a> &#8211; touched a high of 89 so far in 2016 as against 72 a year ago and 23 in 2014.
These deals, ranging from M&amp;A to IPOs and secondaries, have been providing much needed exits to venture capital firms that have now adopted a more cautious approach.
In a significant exit event in July, online travel agency <a style="color: #000080;" href="http://dealstreetasia.com/tag/yatra" target="_blank">Yatra Online</a> agreed to a reverse merger with Terrapin 3 Acquisition Corp in a multi-phased transaction that assigned it an enterprise value of $218 million.
The transaction provided a partial exit to a clutch of venture capital investors, including Norwest Venture Partners (NVP), Reliance Venture Asset Management Ltd, IDG Ventures, Valiant Capital, Vertex Ventures and Intel Capital that have invested in the company over the past 10 years.
Earlier this year, Tata group company <a style="color: #000080;" href="http://dealstreetasia.com/tag/titan" target="_blank">Titan Co. Ltd</a> had also acquired a majority stake of  62% in online jewellery retailer <a style="color: #000080;" href="http://dealstreetasia.com/tag/caratlane" target="_blank">CaratLane Trading Pvt. Ltd</a> for Rs.357.2 crore (approximately $53 million). That transaction also provided an exit to venture capital investor Tiger Global Management Llc.
&#8220;E-commerce remains an attractive space because of the immense market size and the potential for winning companies to become really large. The catch though is that with consolidation happening and clear winners emerging, the bar is set that much higher in terms of extent of differentiation required. This is because replacing or defending oneself against existing incumbents has become even harder,&#8221; said Shubhankar Bhattacharya, Venture Partner at early-stage investor <a style="color: #000080;" href="http://dealstreetasia.com/tag/kae-capital" target="_blank">Kae Capital</a>.
<figure id="attachment_58337" aria-describedby="caption-attachment-58337" style="width: 550px" class="wp-caption aligncenter"><a href="http://www.dealstreetasia.com/wp-content/uploads/2016/11/ishitagraph3.png" rel="attachment wp-att-58337"><img loading="lazy" decoding="async" class="wp-image-58337 size-full" src="http://www.dealstreetasia.com/wp-content/uploads/2016/11/ishitagraph3-e1479132022738.png" alt="ishitagraph3" width="550" height="280" /></a><figcaption id="caption-attachment-58337" class="wp-caption-text">Indian e-commerce startups exits through M&amp;As and IPOs (Data: tracxn)</figcaption></figure>
<h3 style="text-align: justify;">Investors still fancy e-commerce</h3>
Even as the Indian startup story is clouded by markdowns and funding woes, investors are still keen on the e-commerce sector. Despite the decline in the total funding in the e-commerce sector in 2016, the number of deals still hold ground.
According to the Tracxn data, the total amount of funding in the e-commerce space, which it defines as online platforms for buying and selling of goods and services, is the lowest in three years so far this year at $2.3 billion across 476 deals, as compared to $6.01 billion in 201 from 564 deals. In 2014 the total funding in the sector was at $4.08 billion from 214 deals.
The data also includes companies which enable online transactions across the industry, such as  markeplaces, listing platforms, booking platforms etc.
<figure id="attachment_58328" aria-describedby="caption-attachment-58328" style="width: 550px" class="wp-caption aligncenter"><a href="http://www.dealstreetasia.com/wp-content/uploads/2016/11/ishitagraph1.png" rel="attachment wp-att-58328"><img loading="lazy" decoding="async" class="wp-image-58328 size-full" src="http://www.dealstreetasia.com/wp-content/uploads/2016/11/ishitagraph1.png" alt="ishitagraph1" width="550" height="279" srcset="https://media.dealstreetasia.com/uploads/2016/11/ishitagraph1.png?w=550 550w, https://media.dealstreetasia.com/uploads/2016/11/ishitagraph1.png?resize=768,389 768w" sizes="(max-width: 550px) 100vw, 550px" /></a><figcaption id="caption-attachment-58328" class="wp-caption-text">Investments in e-commerce startups for last three years (Data: Tracxn)</dd>
<dd class="wp-caption-dd"></figcaption></figure>
&#8220;The overall sentiment in the e-commerce space is better, as more companies are coming back with clearer business models. There is far more  robustness in business, which is giving more confidence to investors. Many of the aggressive companies with not so established business models have either shut operations or have slowed down, leading to a better scenario now, as what we have are companies which are serious with long term prospects,&#8221; said Sreedhar Prasad, Partner, KPMG.
The high levels of funding in the last two years can be attributed to the spike in the valuation of unicorns leading to large amounts of money in the year. In 2014 and 2015, e-commerce giant <a style="color: #000080;" href="http://dealstreetasia.com/tag/flipkart" target="_blank">Flipkart</a> recorded the largest funding deals in those years by raising $1 billion and $700.6 million respectively.
<figure id="attachment_58336" aria-describedby="caption-attachment-58336" style="width: 550px" class="wp-caption aligncenter"><a href="http://www.dealstreetasia.com/wp-content/uploads/2016/11/ishitagraph2.png" rel="attachment wp-att-58336"><img loading="lazy" decoding="async" class="wp-image-58336 size-full" src="http://www.dealstreetasia.com/wp-content/uploads/2016/11/ishitagraph2.png" alt="ishitagraph2" width="550" height="167" srcset="https://media.dealstreetasia.com/uploads/2016/11/ishitagraph2.png?w=550 550w, https://media.dealstreetasia.com/uploads/2016/11/ishitagraph2.png?resize=768,233 768w" sizes="(max-width: 550px) 100vw, 550px" /></a><figcaption id="caption-attachment-58336" class="wp-caption-text"> Startups that raised the largest funding round in the last three years. (Data: Tracxn) </figcaption></figure>
In 2016, however the the largest deal recorded has been that of travel website Ibibo raising $250 million from South African media and internet company <a style="color: #000080;" href="http://naspers" target="_blank">Naspers</a>. <a style="color: #000080;" href="http://dealstreetasia.com/tag/ibibo" target="_blank">Ibibo </a>was recently acquired by larger rival <a style="color: #000080;" href="http://dealstreetasia.com/tag/makemytrip" target="_blank">MakeMytrip</a> for around $720 million.
This year, Flipkart has been <a style="color: #000080;" href="http://India: Flipkart valuation marked down by investors Valic, Fidelity, again Read more at: http://www.dealstreetasia.com/stories/flipkart-valuation-marked-down-by-investors-valic-fidelity-again-57685/" target="_blank">marked down</a> by many of its investors including most recently by <a style="color: #000080;" href="http://dealstreetasia.com/tag/valic" target="_blank">Valic</a> and <a style="color: #000080;" href="http://dealstreetasia.com/tag/fidelity" target="_blank">Fidelity</a> again. Flipkart&#8217;s rival <a style="color: #000080;" href="http://dealstreetasia.com/tag/snapdeal" target="_blank">Snapdeal</a> and transport hailing service provider <a style="color: #000080;" href="http://dealstreetasia.com/tag/ola" target="_blank">Ola</a>, have also been on the receiving side of a<a style="color: #000080;" href="http://Softbank Group writes off $555m in India’s Ola, Snapdeal investments Read more at: http://www.dealstreetasia.com/stories/softbank-group-writes-off-555-million-in-ola-snapdeal-investments-57609/" target="_blank"> markdown </a>by one of their key investors <a style="color: #000080;" href="http://dealstreetasia.com/tag/softbank" target="_blank">SoftBank</a>, as it wrote off close to $555 million of its combined investment in the two firms.
It should however, be noted that unicorns like Flipart and Ola are reported to be in the market to raise more funds, which if closed during the year could skew the funding table. While Flipkart <a style="color: #000080;" href="http://India: Flipkart plans to raise up to $1b fresh funds Read more at: http://www.dealstreetasia.com/stories/india-flipkart-plans-to-raise-up-to-1b-fresh-funds-55010/" target="_blank">is looking to raise around $1 billion </a>according to the reports, <a style="color: #000080;" href="http://India: Ola in talks with Softbank, others to raise up to $500m: Report Read more at: http://www.dealstreetasia.com/stories/55338-55338/" target="_blank">Ola is eyeing a funding round</a> of around $300-400 million.
Also Read:
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/in-progress-deal-activity-in-indian-e-commerce-grows-as-china-stagnates-45427/" target="_blank">Deal activity in Indian e-commerce sector grows amidst decline in US, China</a>
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/india-fashion-e-commerce-firm-myntra-acquires-rival-jabong-48523/" target="_blank">India: Flipkart group firm Myntra acquires Rocket-backed rival Jabong for $70m</a>
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/tiger-global-gets-exit-option-with-titans-caratlane-deal-40739/" target="_blank">India: Active investor Tiger gets much-needed exit in Titan-CaratLane deal</a>
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/yatra-caratlane-deals-put-spotlight-back-on-vc-exits-47905/" target="_blank">India: Yatra Online, CaratLane deals put spotlight back on VC exits</a>
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Exclusive: Investors bullish on Indian e-commerce as exit events hit a peak

Exclusive: Investors bullish on Indian e-commerce as exit events hit a peak

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