BENGALURU: Startups and venture capital-backed companies raised more than Rs 1 lakh crore during calendar 2019 — 26% more than the over Rs 81,000 crore raised by companies in equity capital markets, as the gap with money flowing into India’s digital economy widens. In 2018, startups had raised 18% more capital than Indian equity markets. That was the first year when the gap emerged in favour of startups.The continuing expansion of the difference underlines the slowdown in the overall economy, hitting sectors like fast moving consumers goods ( FMCG ), even as technology startups have been able to mostly buck the trend till now. Back in 2017, which was the last time when total capital flows into startups had set a record high, equity markets were able to mop up double that amount (see graphic).The Indian startup ecosystem saw a 35% increase in capital invested this year compared to 2018, setting a fresh record. But the number of startups that attracted funding fell by 17% as more money flowed into fewer companies, according to data intelligence platform Tracxn . Global investor interest in local tech startups has been high in the backdrop of growing proliferation of smartphones and internet, the China-US trade war making India more attractive, and the large exit from Flipkart last year (where Walmart acquired 77% stake for $16 billion) proving money can be made.The capital market mobilisation of Rs 81,174 crore — which includes IPOs, offers for sales (OFS), qualified institutional placements (QIPs) and investment trusts — fell 49% short of the all-time high Rs 1,60,032 crore raised in 2017, according to data analytics major Prime Database. For India Inc, 2019 was plagued with a debt crisis along with the slowdown in economic growth even as capex over the last few years has shrunk. The fall in money raised from capital markets was also driven by a lower number of IPOs and QIPs, despite the market reaching a new high in 2019 as global liquidity continued to push up investor interest.For Indian startups, raising more capital is necessary as they have to build full-stack business models, which requires more funding, according to venture capital investors. “Startups are not merely an aggregation layer but also building a supply by creating an infrastructure around their set of services, all of which is capital-intensive and not apparent to us,” said Anand Lunia , founding partner at early stage investment firm India Quotient He said that online retailers don’t just need to invest in building an online marketplace but also setting up warehouses and a logistics fleet. Similarly, online food delivery companies need to invest in cloud kitchens and back-end infrastructure. “Also, these companies are investing in habit change through advertising and discounts,” said Lunia.Some of the largest capital-raises in the startup world in 2019 included $1.5 billion by hospitality major Oyo from SoftBank and founder Ritesh Agarwal’s RA Hospitality, and Paytm’s $1-billion raise from T Rowe Price, Ant Financial and SoftBank. In the capital markets, some of the largest raises included QIPs of Axis Bank and Bajaj Finance, which raised Rs 12,500 crore and Rs 8,500 crore, respectively.