LIVEMINT: In 2016, Indian start-ups got a reality check with valuation markdowns, market share losses and a lack of big-ticket fund raises. But while the funding bubble burst, start-ups had a “soft landing”.

In 2017, investors turned more choosy, putting higher amounts of money into a few companies they believe are potential winners. So, while the amount of start-up funding in 2017 doubled, the volume of deals was lower. Start-ups raised roughly $10.7 billion in 2017, compared with $4.6 billion in all of 2016, according to data with Tracxn, a start-up tracker.

More than half of all start-up funding in 2017 went to just three companies, online retailer Flipkart, payments firm Paytm and cab-hailing app Ola.

The volume of start-up deals, a more reliable indicator of investment activity, fell to 973 last year, compared with nearly 1,300 in 2016, according to Tracxn. Early-stage funding of internet start-ups saw a sharp, unexpected slump—a worrying sign for next year.

On the actual business side, things did improve in 2017. After nearly 18 months, India’s e-commerce market finally picked up sharply in the second half of the year, driven by strong growth at Flipkart Ltd and Amazon India and new entrant Paytm E-Commerce. Online retail grew 23% to $17.8 billion in 2017, up from $14.5 billion in gross merchandise value (GMV) last year, according to RedSeer Management Consulting, a market research and consulting firm.

The expansion of online retail is likely to accelerate next year, with the market projected to increase by as much as 60% to $28-30 billion in gross merchandise value (GMV), according to RedSeer estimates. GMV is an e-commerce metric that refers to the value of goods sold on a site but does not account for discounts or even sales returns.

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