Indian Startup Funding Witnesses Decline in H1 CY23, but Positive Growth Demonstrated: PwC Report
- ByStartupStory | July 10, 2023
The Indian startup ecosystem experienced a decline in funding during the first half of 2023, reaching its lowest point in the last four years, according to a report by PwC India titled “Startup Perspectives – H1 CY23.” The total funding amounted to USD 3.8 billion across 298 deals, representing a decrease of nearly 36% compared to the previous half-year period (H2 CY22) which recorded USD 5.9 billion in funding.
Despite the challenging funding market conditions, the fintech, SAAS, and D2C sectors remained the most funded during H1 CY23, as highlighted in the PwC report. Investors have shown strong support for their portfolio companies by increasing investments in startups that demonstrated positive growth.
Amit Nawka, Partner – Deals & India Startups Leader at PwC India, commented on the current investment outlook, stating, “A funding winter is just a season in a startup’s journey. There is a slowdown in startup funding despite significant untapped capital reserves held by venture capitalists (VCs). Active VC firms in India have secured new funds in the past year, and we can expect the pace of investments to pick up in the next few months.”
The report also provides insights into various aspects of the startup ecosystem:
Stages of Funding: Early-stage deals accounted for 57% of the total funding in H1 CY23 in terms of volume. However, in value terms, early-stage deals contributed only approximately 16% of the total funding, reaching their lowest point in H1 CY23 compared to the previous two years. Growth and late-stage funding deals accounted for 84% of the funding activity in H1 CY23 in terms of value.
M&A Transactions: While VC funding declined, M&A transactions remained consistent compared to H2 CY22. In H1 CY23, there were 80 M&A deals involving startups, with 80% being domestic transactions. SaaS, FinTech, and e-commerce and D2C sectors witnessed the highest number of M&A transactions during this period.
Sector-wise Investment: SaaS, D2C, FinTech, e-commerce B2B, and Logi and AutoTech were the top five sectors receiving investment in the first half of the year, contributing to approximately 89% of the total funding. D2C and online gaming sectors experienced a significant increase in investments compared to H2 CY22, while the foodtech sector saw a four-fold increase in investments.
City-wise Startup Funding: Bengaluru, NCR, and Mumbai continued to be the key startup cities in India, accounting for approximately 83% of the total funding activity in H1 CY23. Funding activity declined in most cities except Chennai, which witnessed higher funding in the SaaS space.
The report provides valuable insights into the funding landscape of Indian startups, indicating potential growth opportunities and the sectors attracting significant investments.
About PwC:
PwC is a global network of firms in 155 countries, dedicated to building trust in society and solving important problems. With over 327,000 professionals providing quality assurance, advisory, and tax services, PwC aims to make a positive impact.
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