Consumer Internet startups, the hottest ticket in Indian startup ecosystem for the last decade, appeared to have hit a massive speed breaker in 2016. Funding slowed down drastically. In the ecommerce sector alone, funding fell to $1.94 billion in 2016 from $4.7 billion in 2015, as per data from Venture Intelligence. Many were forced to shut shop. Tracxn counted over 314 consumer Internet startups which shut down in 2016 compared to 215 the previous year. Those who survived saw their valuations fizzle out; even the biggest startups were not able to get through without anguish.
This bleak scenario led to many observers questioning the legitimacy of India’s consumer Internet story. They had data to back this hypothesis as funding began shifting away from consumer-Internet startups. But there is one singular aspect of the analysis that caught my eye – a few people started questioning the very existence of India’s big consumer Internet market.
A chart published in The Economist last month said that ecommerce sales in India were flat in 2016, after doubling in 2014 and trebling in 2015. The report accompanying the chart noted that of the 200 Mn-250 Mn Indians with Internet access and credit or debit cards; only a small proportion of this were inclined to shop online. Although this part may be true.