It is disappointing to see that many Website portfolios in India have been up for sale in the last 2-3 years. What is disturbing is the fact that these portfolios are not selling despite being offered at heavy discounts. Most of these portfolios are made up of copycat companies that are responsible for the malaise faced by venture capital business in India. The reason why VC portfolios are being offered at a discount is that they are not worth what their balance sheet reflects. VC business is clearly passing through a downturn in India and it is the new start ups in the country that are feeling the heat.
Money is being siphoned off from the market
In the last decade or so, venture capital firms have invested around $10 billion in Indian start ups. Most of this money has gone into tech and internet based companies. But what is shocking is the fact that a vast majority of these investors have exited form their deals. The total money that has been taken back by venture capital companies amounts to $8.5 billion. Because of this tendency of the investors to strike exit deals, VC market has entered into a phase of stagnancy in the last 18 months or so. Investors are today worried about conserving their cash and taking very little interest in pumping fresh money into new start ups.
In 2016, series A investments were only half of what they were in 2015. These are investments into a start up during early stages of its formation. This shortage of funds for startups will continue in not just 2017 but in several quarters after this year also. Right now, most of the VC firms operating in India are trying to get rid of their assets in a bid to recover their principal amount.