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E-commerce and consumer internet companies have raised more than $7 billion through private equity and venture capital funding in 2018, according to a report by Ernst & Young (EY).
This includes 200 deals of which $5.9 billion raised as early stage capital and $1.3 billion was invested as growth capital.
The hyperLocal segment attracted the maximum capital followed by travel and hospitality, the report said.
A majority of the funding was towards building supply chain, expanding into new segments, global expansion, acquisition or consolidation, and bringing innovative product offerings to the market.
“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,” said Ankur Pahwa, Partner and National Leader, E-Commerce and Consumer Internet at EY India.
Statistics - PE/VC
“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 personalisation, and stimulus provided by Government of India’s Digital India programme, and also programmes such as StartupIndia and Make in India,” he added.
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 Artificial Intelligence (AI), voice/image enabled search, blockchain, AR/VR and IoT among others to service the market better.
“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,” states Vivek Soni, Partner and Leader, Private Equity Services at EY India.
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