Indian startup funding down by 71.5%: GlobalData

Investment in Indian startups through venture capital (VC) has experienced a sharp decline, plummeting by 71.5 per cent to USD 4.9 billion between January and August 2023. This significant drop contrasts with the USD 17.1 billion invested during the corresponding period in the previous year.

According to data and analytics firm GlobalData, during this timeframe, the number of VC funding deals decreased by 42 per cent, with 734 deals announced compared to 1,266 during the same period in 2022.

Aurojyoti Bose, Lead Analyst at GlobalData, said, “Apart from several macroeconomic challenges and geopolitical conditions grappling global VC funding landscape and making a dent in investor sentiments, Indian startup ecosystem is grappling with rising investor caution regarding startup valuations.

Subdued VC funding activity is now a global phenomenon with most of the key markets experiencing decline in deals volume as well as value. India accounted for 5.3 per cent of the total number of VC funding deals announced globally during January-August 2023. Meanwhile, its share of the total disclosed funding value stood at 3.1 per cent.

Some of the notable VC funding deals announced in India during January-August 2023 include USD 250 million fundraising by PhysicsWallah, USD 200 million worth funding raised by Zepto, USD 200 million fundraising by PhonePe, USD 146 million worth funds raised by Veritas Finance, and USD 120 million fundraising by KreditBee.

“In the evolving landscape of VC funding, adaptability and strategic valuation assessments are crucial for the sustainability of the Indian startup ecosystem. While challenges persist, the resilience of these ventures, exemplified by notable funding deals, reaffirms the enduring potential of the Indian entrepreneurial spirit,” Bose added.

In addition to ranking as a prominent VC funding hub in the Asia-Pacific (APAC) region and closely trailing China in both deal volume and value, India also holds a position among the top five global markets for venture capital investment.