Indian Startups Experience 70% Funding Drop in FY23, amounting to $15 billion
- ByStartupStory | July 18, 2023
The Indian startup ecosystem witnessed a significant drop in funding during FY23, with investments plunging by 70% to approximately $15 billion, compared to the peak of $50 billion in FY22, according to a report by market research firm Redseer. As funding recedes, startups are adopting measures to weather the challenges, such as reducing burn rates and accelerating their journey towards profitability.
Various factors contributed to the funding downturn, including rising capital costs, interest rates, economic recession in developed markets, and a decline in the value of tech stocks. Additionally, the slowdown in consumer internet growth posed further obstacles to sustained funding.
Mohit Rana, partner at Redseer, highlighted the importance of boards taking responsibility and supporting founders during these testing times. He also pointed out that ownership of founders in startups is often limited (0-20%) compared to public companies, where founders’ ownership is higher (over 50%) in 65% of cases.
However, the report also predicts positive trends for the future. It projects an increase in profitable unicorns across various sectors, growing from 30 in FY22 to 55 in FY27. Around 50% of unicorns are expected to achieve profitability by FY27, while 20% may face challenges due to regulatory issues, decreasing demand, and unclear business models. Some of the struggling unicorns may pivot to new models, be acquired, or shut down entirely.
On a promising note, the report suggests that profitable unicorns in India could generate five times the profit in FY27 compared to FY22, indicating potential growth opportunities for successful startups.
Follow Startup Story
Related Posts
