Indian Startups Secure Over $11 Billion in Funding in 2023, According to Latest Report
- ByStartupStory | December 30, 2023
Indian startups experienced a challenging year in 2023, marked by a persistent funding crunch that tested the resilience of the ecosystem. Despite the tough conditions, there were notable achievements, including several startups edging closer to public listings, some achieving profitability, and a few joining the coveted unicorn club. However, the struggle to raise funds forced startups to reassess their strategies, leading to some recalibrations and operational changes.
According to data from startup intelligence platform TheKredible, the year saw more than 980 startups raising venture capital worth over $11 billion. While this reflected a significant amount of capital, it marked a sharp decline from the $25 billion raised in 2022 and the $38 billion in 2021. The number of deals also decreased from 1,556 in 2022 to 984 in 2023. However, the funding in 2023 was on par with the levels seen in 2020.
The funding landscape showed some monthly fluctuations, with January starting strong at $1.15 billion but dipping below $1 billion in February before rising again to $1.37 billion in March. March emerged as the second-best month for fundraising in 2023, while December saw a surge in funding, notably with Flipkart raising $600 million.
Late-stage companies such as PhonePe, Flipkart, and Lenskart led the fundraising efforts, with amounts raised reaching $850 million, $600 million, and $600 million, respectively. The year also witnessed the emergence of two new unicorns: Zepto and InCred.
In terms of mergers and acquisitions, the year saw a decline from 204 deals in 2022 to 145 in 2023. However, some significant acquisitions took place, including the acquisition of Chaitanya India by Svatantra Microfin and the acquisition of Strata Geosystems by Infra.Market.
Besides funding challenges, the year saw a significant number of layoffs, with over 24,000 reported across various startups. This was accompanied by shutdowns of several companies, including ZestMoney, Anar, Akudo, Striker by MPL, and Quizy. Despite these challenges, the startup ecosystem also witnessed successful ESOP buybacks and payouts, with Flipkart alone accounting for more than 50% of the total buybacks since 2020.
The funding landscape was dominated by Bengaluru, which accounted for 55% of the total funding, followed by Delhi-NCR with 217 deals amounting to $2.2 billion. E-commerce startups led the way in terms of segment-wise funding, with fintech, SaaS, healthtech, and EV startups following closely behind.
Looking ahead, the Indian startup ecosystem faces ongoing challenges, particularly in sectors such as edtech, fintech, and gaming. While the funding environment remains tough, there are signs of resilience and adaptation, as seen in the successful IPOs of several startups and the occurrence of secondary deals despite the challenging conditions.
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