VC Funding For Indian Start-ups Falls By 71.5% YoY During Jan-Aug 2023: GlobalData

The analytics firm noted that the first eight months of 2023 saw $4.9 billion raised in funding for Indian start-ups, compared to the $17.1 billion funding raised during the same period last year. 

The decline in VC funding activity is not just limited to India, but is rather a global phenomenon with the majority of the big markets witnessing a fall in deals volume as well as value.

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Indian start-ups witnessed a massive fall in venture capital (VC) funding in the first eight months of 2023, data analytics and consulting firm, GlobalData revealed. The firm noted that from January to August 2023, the start-up-focused VC funding in India plunged 71.5 per cent, compared to the same period a year ago. The first eight months of 2023 saw $4.9 billion raised in funding, compared to the $17.1 billion funding raised during the same period last year. 

The analytics firm in it’s data noted that the venture capital funding segment in India transformed majorly in the first eight months of 2023. During the period, the corresponding deal volume dipped 42 per cent on a year-on-year (YoY) basis. 734 venture capital funding deals were announced during the January-August period this year, against more than 1,266 VC funding deals announced during the corresponding period last year, reported Financial Express.

The data pointed out that both deal volume and value declined on a YoY basis, however, the fall was much more substantial in terms of the funding value. GlobalData’s lead analyst, Aurojyoti Bose, added, “Apart from several macroeconomic challenges and geopolitical conditions grappling global VC funding landscape and making a dent in investor sentiments, Indian start-up ecosystem is grappling with rising investor caution regarding startup valuations.”

The report noted that the decline in VC funding activity is not just limited to India, but is rather a global phenomenon with the majority of the big markets witnessing a fall in deals volume as well as value. The firm underlined India’s stature as one of the top APAC markets for VC funding activity, belonging right next to China in terms of deal volume and value, in addition to the country also being one of the top five global markets. 

During the first eight months of 2023, India contributed 5.3 per cent to the total number of VC funding deals announced at the global level, and 3.1 per cent to the total disclosed funding value globally. Some prominent VC funding deals declared in India during the period included $250 million funds raised by PhysicsWallah, $200 million raised by PhonePe, $200 million fund raised by Zepto, $146 million funds raised by Veritas Finance, and $120 million raised by KreditBee. 

Bose stated that the Indian start-up ecosystem needs to adapt and strategically evaluate assessments to sustain itself in the VC funding segment. He added, “In the evolving landscape of VC funding, adaptability, and strategic valuation assessments are crucial for the sustainability of the Indian startup ecosystem. While challenges persist, the resilience of these ventures, exemplified by notable funding deals, reaffirms the enduring potential of the Indian entrepreneurial spirit.”