Indian Startup VC Funding Declines 64% in August 2023
- ByStartupStory | September 1, 2023
The state of venture capital (VC) funding for Indian startups continues to be concerning, as August witnessed a drastic 64% decline compared to the same period last year. Notably, significant-value transactions have remained elusive, contributing to this decline. VC funding for August amounted to a mere $396 million, representing one of the lowest figures in the past year. In stark contrast, August 2022 saw a robust $1 billion in funding. The decline extended to a month-on-month basis as well, with a 25% drop from July’s $529 million. This marks the fourth instance in 2023 where monthly VC funding remained below the $1 billion threshold.
The first eight months of 2023 accumulated a total funding of $7.2 billion, making it unlikely that the Indian startup ecosystem will approach the $24 billion recorded in 2022. The saving grace for August was Zepto, an online grocery delivery startup, securing a $200 million transaction, which accounted for half of the total venture funding in the month. While Indian startups did receive some VC funding in August, the total of $4.5 million across seven deals was far from encouraging, reflecting the ongoing challenges within the ecosystem, likely to persist for the rest of the year.
Breaking down funding stages, late-stage funding was primarily driven by Zepto’s $200 million transaction, while early and growth stages secured $98 million each. A notable trend since the second half of 2022 has been the consistent activity in early-stage funding, although deal values remain modest. Few large deals have occurred, which usually significantly contribute to overall VC funding.
Regarding funding by city, Mumbai emerged at the forefront, raising a total of $207 million, followed by Delhi-NCR at $64 million, and Bengaluru at $54 million. These three cities have consistently dominated the startup landscape, with occasional participation from cities like Pune and Chennai.
With only four months left in the year, the Indian startup ecosystem is anticipated to conclude 2023 with double-digit VC funding, likely reaching around $7 billion. This figure falls significantly short of 2022’s numbers, largely due to a more challenging macroeconomic environment. The key factor driving the decline in VC funding is the rise in interest rates, particularly in the US, which has led to a recalibration of investment strategies. This trend is expected to persist, with the hope that 2024 will bring more favorable conditions.
Follow Startup Story
Related Posts
