The cash spigot for Chinese technology startups may have dwindled to a trickle, but it's still dripping. In India, nascent firms face a drought.
Just $583 million went toward funding Indian entrepreneurs in the second quarter, 60 percent less than in the prior period and just 25 percent of the amount pumped into startups a year earlier, according to data from CB Insights.
Data on China venture-capital funding from Preqin, a market researcher, point to a decline in the amounts raised by the pools of money that are then deployed to back the hippest new photo-editing app or ride-sharing taxi killer. CB Insights examines the cash that flows from VCs into startups. In theory, there should be a correlation between VC funding and startup funding -- more money in the kitty means more money to bet on the next big thing.
The shrinking pot has hurt Chinese startups, with the number of deals decreasing. At the same time, while total funding rose from the prior period -- and fell from a year earlier -- 40 percent of that money (equal to $2.3 billion) went to just three companies that are already well-advanced in their money-raising journey, the CB Insights numbers show.
Yet if China is facing pain, India is hemorrhaging. With $100 million as the country's top investment round, Oyo Rooms garnered just 10 percent of the money raised by China's biggest deal -- which went to Didi Chuxing, the ride-hailing service. The Indian hotel-booking startup's meager fund raising is emblematic of the country's situation.
While India's portion of total Asian fund-raising deals remained steady at around one-third, its share of the money more than halved, to just 7.9 percent, while China's rose.
If India's startup scene is to prosper through these tough times, its entrepreneurs will need to weave tales worthy of Bollywood.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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