Funding Winter | Venture Capital Investors See Start-Up Funding Rebound In 6-12 Months: Survey

The survey showed that the rest of the venture capital investors believe that the funding winter is likely to persist for a duration of 12-18 months or even longer

Last month, a PwC India report revealed that during the first half of 2023, start-up funding hit its lowest level in the last four years, amounting to a total of $3.8 billion.

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In a recent survey among venture capital (VC) investors, 50 per cent hold an optimistic outlook for the revival of start-up funding within the next 6-12 months, while, 17 per cent anticipate a resurgence of funding much sooner. The survey by Redseer Strategy Consultants showed that the rest of the venture capital (VC) investors believe that the funding winter is likely to persist for a duration of 12-18 months or even longer, reported Business Today. Notably, the Consultancy surveyed 21 VCs in June this year. 

Last month, a PwC India report revealed that during the first half of 2023, start-up funding hit its lowest level in the last four years, amounting to a total of $3.8 billion. The report exacerbated concerns surrounding the current state of the Indian start-up ecosystem, indicating that it is undergoing a phase characterised by a scarcity of venture capital inflow. This situation has led to challenges for start-ups in securing funds, often referred to as a "funding winter."

As per the report, Redseer Survey's the projected funding patterns indicate that 2023 is likely to mirror the trends observed from 2017 to 2020, with funding ranging between $12 billion to $15 billion. Moving into 2024, an optimistic trajectory is foreseen, with a potential range of $15 billion to $20 billion. The count of deals, which decreased from 1,519 in 2022 to 700–900 in the early months of 2023, is anticipated to rebound in 2024 to a range of 1,000–1,200 deals. Redseer's projections for this year's deals primarily encompass seed or early-stage investments, aligning with the trend of 2017, the report said. 

According to Kanishka Mohan, a partner at Redseer, among the pool of over 1,000 startups evaluated by the consultancy, there are 10 noteworthy emerging themes. These encompass beauty and personal care (BPC), health and wellness, diagnostics and clinics, gaming and app studios, personal loans, customer relationship management (CRM), Industrial e-commerce business-to-business e-commerce market (eB2B), insurtech, DevOps, and finance. 

According to the "Startup Perspectives H1 CY23" report by consulting firm PwC India, in the first half of 2023, startup funding reached its lowest point in the past four years, totaling $3.8 billion. This amount also marked a decline of 36 percent compared to the same period in the previous year. The decline in funding value was attributed to a reduction in the number of funding rounds, which decreased from 729 in H1 2022 to 298 in H1 2023. The average investment size per individual deal stood at $4 million.

Among the 298 deals, early-stage investments constituted 57 per cent of the funding deals in the first half of the year, with the remaining portion allocated to growth and late-stage deals.