Funding to Indian Startups Plummets by 77% in Jan-July 2023 Compared to 2022: Report
- ByStartupStory | July 31, 2023
In the first seven months of 2023, funding to Indian startups experienced a significant decline of about 77 percent compared to the same period in the previous year. This drop has exacerbated the fund crunch situation, and industry experts are warning about the potential overestimation of India’s internet market.
According to data from Venture Intelligence, Indian startups received $4.4 billion in private equity and venture capital funding between January and July, a steep decline from the $19.3 billion recorded during the same months in 2022. Additionally, the number of funding deals plummeted to 344 in 2023 from 821 in 2022.
July 2023 saw a notable decline in funding, with investors participating in about 42 funding rounds, totaling $523 million, compared to $2.6 billion invested across 77 funding rounds in July 2022. The funding amount for July 2023 decreased by close to 80 percent year-on-year, and the number of deals fell by nearly 45 percent compared to the previous year.
Furthermore, the funding amount also slightly decreased from $546 million in about 44 deals in June. However, it is essential to note that this data only includes funding deals announced until July 25.
These funding challenges come amidst concerns raised by industry experts, including founders such as Cuemath’s Manan Khurma, Phonepe’s Sameer Nigam, and Zerodha’s Nithin Kamath, as well as venture capitalists, about the potential overestimation of India’s internet market. It appears that the market’s growth might be slowing down after the boost it experienced during the pandemic.
Analyzing the funding stages, the early-stage deals in the January-July 2023 period recorded a decline of about 55 percent from the seven-month average of 2022, with startups receiving $722 million, a 59 percent decrease from the $1.8 billion received during the same months in 2022. Growth and late-stage investments also faced pressure, with startups securing $3.7 billion in funding across 146 deals until July 2023, compared to a seven-month average of $12.4 billion raised across 272 late and growth-stage deals in the same period in 2022.
Among the investors, Peak XV Partners (previously Sequoia India) stood out, leading with around 21 deals in the first seven months of 2023. Blume Ventures and Accel India followed, with 16 and 12 investments, respectively. Other active investors included Rainmatter Capital and Lightspeed Ventures, each with 10 investments.
Noteworthy deals in 2023 so far include eyewear brand Lenskart’s $500 million fundraising in March and Builder.ai’s $250 million fundraising in May. Infra. Market, Zetwerk, and InsuranceDekho also secured $150 million each. Additionally, Veritas Finance, an NBFC, raised $146 million from Multiples PE, Avendus PE, and IFC in July. Other significant deals this month included Genleap’s $50 million and RenewBuy’s $40 million funding rounds.
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