According to the “VC investments in Indian e-commerce” report by venture capital and advisory company Allegro Capital, since 2010, 49 venture capital companies have invested USD 853 million in 53 Indian e-commerce companies. The same source shows that there will be massive consolidation among these 53 companies over the next six months.
Results point out that it is unlikely that more than 15 companies will survive as independent entities by 2014. Allegro has mentioned that Indias online shopping market was saturated and growth is only driven by increasing average revenue per user. This would limit a market players ability to raise follow-on funding, commonly referred to as a Series B round. Findings unveil that while there were nine follow-on investments between January and May 2013, amounting to USD 155 million, over that same period, there were no Series A investments. Investors are eyeing mergers in order to salvage their ventures, the report indicates.
The report also reveals that by 2016, the Indian e-commerce market is expected to hit USD 13 billion, growing from USD 1.1 billion in 2012. This will be driven primarily by growth in marketplace models, making up two-thirds of the projected figure, as opposed to the current model in which online shops own and manage their own product supply chain. Also, data shows that offline brands will shift their operations online.
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