India VC funding

India's venture capital (VC) landscape has undergone a substantial transformation, marked by a considerable downturn in funding activity, during January-July 2023. The country saw a stark decline of 42.9% in VC deal volume, with a corresponding plummet of 72.5% in disclosed funding value compared to the same period in 2022. This unsettling trend, amidst broader economic uncertainties, paints a challenging picture for the country's startup ecosystem.

Indian startups witnessed a significant fall in business funding in the first half of 2023 (January to June) by raising only $3.8 billion during the six-month period, a massive decline of 36% as compared to the fundraising in H1 of 2022. Last year, Indian startups raised $5.9 billion in the first half.

As per Globaldata survey, VC funding deals volume has declined year-on-year from 1,128 to 644. The corresponding disclosed deal value fell year-on-year from $16 billion to $4.4 billion.

India is a key APAC market for VC funding activity and strands just next to China in terms of deals volume as well as value. Moreover, it is among the top five global markets for VC funding activity. However, the startup ecosystem in the country is currently facing challenges in raising capital due to dent in investor sentiment.

“The decline of VC funding value by close to one-fourth signals the turbulent times the country’s startups are going through due to increased investor cautiousness amid the prevailing macroeconomic challenges and uncertain market conditions. India accounted for 5.1% of the total number of VC deals announced globally during January-July 2023 while its share of the corresponding deal value stood at 3.1%.

As India remains a pivotal player in the global VC arena, fostering an environment of renewed investor trust and nurturing entrepreneurial ingenuity will be crucial for India's journey towards revitalizing its venture capital landscape.

S Mohini Ratna, Editor, VARINDIA