The Indian venture capital (VC) funding landscape has encountered a significant downturn in 2023, reflecting subdued activity in both deal volume and funding value, GlobalData said.
A total of 811 VC funding deals worth $5.5 billion were announced in India during the first three quarters (Q1-Q3) of 2023, showcasing a staggering year-on-year (YoY) decline of 42.3 percent in terms of deal volume and a massive 70.4 percent in disclosed funding value.
Comparatively, the same period in 2022 saw 1,405 VC funding deals with a disclosed value of $18.5 billion in India, underlining the extent of the decline in 2023.
The VC funding value during Q1-Q3 2023 was not even at one-third of Q1-Q3 2022’s level, showcasing a significant downturn. Multiple factors, including the Russia-Ukraine conflict, macroeconomic challenges, and concerns about startup valuations, seem to have contributed to this extended period of subdued funding activity, Aurojyoti Bose, Lead Analyst at GlobalData, said.
However, despite the challenging funding climate, India remains a key Asia-Pacific (APAC) market for VC funding activity, standing next to China in terms of both deal volume and value. Additionally, India ranks among the top five global markets for VC funding activity.
During Q1-Q3 2023, India accounted for a 5.3 percent share of the total number of VC funding deals announced globally, with its share of the corresponding deals value standing at 3 percent.
Several notable VC funding deals were announced in India during Q1-Q3 2023, including a $250 million fundraising by PhysicsWallah, $229 million funding raised by Perfios Software Solutions, $200 million fundraising by PhonePe, and $200 million funding raised by Zepto, highlighting resilience and potential in certain sectors despite the funding downturn.