ETSA 2021: Ecommerce firms brace for funding slowdown

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The past two years have been a watershed for India’s ecommerce industry amid the pandemic and resulting lockdowns. In 2022, investments won’t dry up but Indian ecommerce startups won’t see the exuberance of the past two years continue either.

That was the consensus view at the ET Startup Awards in Bengaluru on March 12, which saw the biggest names in Indian ecommerce gather to discuss various topics concerning the future of India’s startup ecosystem.

Ecommerce in India attracted investments worth $15 billion from venture capital and private equity funds in 2021, according to data sourced from Venture Intelligence, a five-fold jump from 2020. The number of deals also jumped from 149 in 2020 to 219 in 2021.

But this is unlikely to be replicated in 2022. “Everybody knew the last 24 months was a good time to raise money,” said Bhavna Suresh, cofounder and CEO of 10Club. “And I think everybody understands that markets go through swings. If the question is ‘are we in a down round right now’, there is absolutely no doubt about that.”

“[Ecommerce] is not going to stagnate because there is a lot of money flowing in,” said Hari Menon, CEO and cofounder of BigBasket. “But I think you will settle it down a lot more. You will see corrections, but the money will not dry up.”

Meanwhile, the industry also has to prepare for regulations. In June 2021, the ministry of consumer affairs proposed amendments to the Consumer Protection (E-commerce) Rules, 2020, which were first notified in July 202. The proposed changes included a ban on ‘flash sales’ and curbs on private labels. Later in June, the centre’s “clarification”, which said the new rules allowed ecommerce portals to conduct conventional sale events while disallowing “only specific flash sales or back-to-back sales”, only compounded the confusion.

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