As per the latest report by EY, Indian e-commerce and consumer Internet companies raised $15.4 billion in PE/VC funding in 2022, which is a two-fold jump from $8.2 billion in 2020.

The report, EY-PeerCapital E-Commerce and Consumer Internet Trendbook 2023 highlighted that the internet and e-commerce sector in India has emerged as one of the fastest-growing sectors in the country, with growth further accelerated by the shift in consumer behaviour post-pandemic. 

EY-PeerCapital E-Commerce and Consumer Internet Trendbook 2023

As per the report, 2023 is going to see an increased focus on Tier 2 and 3 cities to drive the exponential growth of internet businesses. Additionally, influencer-led commerce will emerge as a strong channel for customer acquisition and loyalty-building in these markets.  

Ankur Pahwa, Managing Partner, PeerCapital, said,

“The “funding winter” can be likened to a tale of two cities, as USD 12.6 billion of this deployment was invested in H1 2022, slowing down to USD 2.8 billion in H2 2022. Early-stage companies saw sustained funding momentum in 2022, accounting for 17 per cent of the PE/VC funding raised by companies in the sector as compared to 6 per cent in 2021, and are likely to continue this promising path.”

Key Highlights 

• Growth in consumer internet businesses will be led by Tier 2 and 3 cities.
• Gamification in products across sectors will emerge as a strong lever for customer engagement and retention.
• Growth in per capita GDP and micropayments, as well as young consumers’ demand for entertainment, will translate to increased monetization in gaming.

KT Chandy, Partner, EY Private, said,

“E-commerce and consumer internet sector in India has been on a growth spree in the last few years, emerging as the second largest online shopper base globally. The growth momentum is expected to continue, driven by improved digital infrastructure, rise in customer base and robust government initiatives. Going forward into 2023, businesses are expected to embrace innovative methods of customer acquisition, while focusing on cash creation and profitability.”

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