ETSA 2021: E-Commerce Companies Brace for Funding Slowdown

The past two years have been a turning point for India’s e-commerce industry amid the pandemic and resulting lockdowns. In 2022, investment won’t dry up, but neither will India’s e-commerce startups see the exuberance of the past two years continue.

That was the consensus view at the ET Startup Awards in Bengaluru on March 12, which brought together the biggest names in Indian e-commerce to discuss various topics regarding the future of India’s startup ecosystem.

E-commerce in India attracted investments worth $15 billion from venture capital funds and private equity funds in 2021, according to data from Venture Intelligence, a fivefold increase from 2020. The number of transactions also increased from 149 in 2020 to 219 in 2021.

But that’s unlikely to happen again in 2022. “Everyone knew the past 24 months was a great time to raise funds,” said Bhavna Suresh, co-founder and CEO of 10Club. “And I think everyone understands that markets go through fluctuations. If the question is “are we in a negative phase right now”, there is absolutely no doubt about it.

“[Ecommerce] is not going to stagnate because there is a lot of money coming in,” said Hari Menon, CEO and co-founder of BigBasket. “But I think you are going to calm down a lot more. You will see corrections, but the money will not dry up.

Meanwhile, the industry must also prepare for regulation. In June 2021 the Department of Consumer Affairs proposed changes to the Consumer Protection (eCommerce) Rules 2020 which were first notified in July 2020. The proposed changes included a ban on ‘flash sales’ and private label restrictions. Later in June, the center’s “clarification” that the new rules allowed e-commerce portals to run conventional sales events while prohibiting “only specific flash sales or back-to-back sales” only ‘aggravate the confusion.

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