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Startups fail to receive funds for their product ideas

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By Anirudh Saligrama

Bangalore, Oct 25: The Indian startup sector is failing to hit past heights. The number of investments have dropped due to a lack of innovative ideas.

According to a report published by startup research company Xeler8, only 71 deals happened in September. In August 2016, there were total of one hunded and one funding deals and July 2016 witnessed one hundred and twenty three deals. September was the lowest number of funding deals theis year.

The report also says that the early seed funding fell 23% in the third quarter when compared to the second quarter.

Nainesh Kapadia, co-founder of FoundTonic said,“The main reason is, since the liquid funds are dried up, investors are taking precautions before investing in any company. Secondly, online markeptplace is something that is thriving in the country now. "

"There is hardly any growth now in the sector and investors are now not looking forward to invest in e-commerce sector.” He added.

Balram Nair, VP at Chennai Angels also cited similar reason wherein e-commerce is now a dry sector and investors are not looking further to invest in online marketplace. “The series A funding round is market driven.We often look for investing in startups that can generate cash. We also look upon startups wherein they utilise funds for growth capital and not for operational capital,” Balram said.

Vinod Shankar, co-founder and COO at incubator- Ginserv said, “The startups in recent times are not coming up with innovative ideas. Stale ideas are forcing companies to invest lesser each month."

The investment capital took surprising curves as 465 million USD was raised in the month of July, 693 million USD in August and 204 million USD according to Xeler8 report.

"Year 2016 did not begin well for start-ups. As many of them either shut shops or merged with large corporates. The closure cycle of investments became long". said Akshit Gupta, co-founder of FundTonic, during the launch of FundTonic.

According to NASSCOM report of 2015, Indian tech startups are set to generate about 2.5 lakh jobs in the next five years. The report also said that India stands third in Global startup ecosystem.

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