e-commerce and consumer internet companies have raised over US$7 billion

• Includes 200 deals of which US$5.9 billion raised as early stage capital and US$1.3 billion was invested as expansion/growth capital

• HyperLocal segment attracted the maximum PE/VC capital followed by travel and hospitality

• E-commerce and consumer internet companies have raised over US$7 billion in PE/VC capital in 2018 : EY report

E-commerce and consumer internet companies have raised over US$7 billion in private equity and venture capital in 2018, says EY report, launched today at the IVCA Conclave 2019. The report titled ‘E-commerce and Consumer Internet Sector – India Trendbook 2019’ highlights that majority of the funding is towards building supply chain, expanding into new segments, global expansion, acquisition or consolidation, and bringing innovative product offerings to the market.

The report covers the following sectors as part of e-commerce and consumer internet – hyperlocal, travel and hospitality, B2C, edtech, payments and wallets, B2B, mobility, fintech, healthtech, social commerce, gaming, logistics tech, online classifieds and services sector. Of all companies, start-ups like OYO, Swiggy, Byjus, PayTm Mall, Pine Labs, Zomato, Udaan, PolicyBazaar and CureFit have collectively raised a lion’s share (US$4.6 billion in 2018) of the total investments into this segment. Deals that stood out include – Walmart’s acquisition of Flipkart of US$16 billion, Alibaba’s investment in BigBasket and PayTm, Tencent’s investment in Dream11, and Naspers investment in Byjus and Swiggy.

Ankur Pahwa, Partner and National Leader – E-Commerce and Consumer Internet, EY India says, “The Indian e-commerce and consumer internet sector has seen significant inflow of capital in the year 2018, making India one of the most exciting destinations to invest in across the globe. This massive opportunity has been unlocked by the increasing number of digital transactions, digital literacy and the rise of rural e-commerce, growing use of vernacular content, adoption of the omni-channel strategy, low mobile data tariffs coupled with data-driven personalization, and stimulus provided by Government of India’s Digital India programme, and also programmes such as Start Up India and Make in India.”

The report states that the trends in terms of consolidation will continue in 2019. Companies will need to consolidate to add more services and segments to expand the level of engagement with customers and leverage emerging technologies such as AI, voice/image enabled search, blockchain, AR/VR, IoT, etc. to service the market better.

“Year 2019 is going to be an exciting one for ecommerce and consumer internet companies in India, however there has to be continued investment, organic as well as inorganic, in emerging technologies as also sharper focus on operational efficiency, improvement in unit economics and greater control on the cash burn, which will be essential as companies continue to innovate and engage more effectively with consumers,” added Ankur Pahwa. 

“The last four years have witnessed a spectacular increase in PE/VC investments in India and e-commerce has been one of the leading sectors in attracting these investments. Globally, India remains the only meaningfully large consumer and retail market with significant headroom for future growth that is open to foreign investment. The exits recorded by the investors in 2018 showcases the trust placed by the PE / VC community in the Indian start-up ecosystem. These exits are just not limited to consolidation within the market players but includes investments by large global organizations, which clearly paves the way for the next level of growth for the Indian start-up ecosystem,” states Vivek Soni, Partner and Leader – Private Equity Services, EY India.

Major sectors which attracted PE / VC capital :