In the first eight months of 2023, India’s startup-focused venture capital (VC) funding sector experienced notable changes.
According to GlobalData, there was a decline in both deal volume and value in VC funding compared to the same period in 2022. Despite facing challenges such as macroeconomic conditions and geopolitical issues impacting investor sentiment, the Indian startup ecosystem continues to exhibit resilience.
During January to August 2023, a total of 734 VC funding deals were announced in India, amassing $4.9 billion. This marked a 42 percent year-on-year (YoY) decrease in deal volume from 1,266 deals in the same period of 2022. The corresponding deal value experienced a substantial 71.5 percent YoY decline from $17.1 billion, emphasizing a cautious approach towards startup valuations among investors.
Aurojyoti Bose, Lead Analyst at GlobalData, stated, “Apart from several macroeconomic challenges and geopolitical conditions grappling the global VC funding landscape and making a dent in investor sentiments, the Indian startup ecosystem is grappling with rising investor caution regarding startup valuations.”
This subdued VC funding activity is part of a global trend, with key markets experiencing a decline in both deal volume and value. India, being a top Asia-Pacific (APAC) market for VC funding, stood next to China in terms of deals volume and value, securing a spot among the top five global markets.
India accounted for 5.3 percent of the total number of VC funding deals announced globally during January to August 2023. Meanwhile, its share of the total disclosed funding value stood at 3.1 percent.
Noteworthy VC funding deals during this period in India include PhysicsWallah raising $250 million, Zepto securing $200 million, PhonePe receiving $200 million, Veritas Finance acquiring $146 million, and KreditBee raising $120 million.
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, according to GlobalData.