The Indian venture capital (VC) landscape has witnessed a significant downturn in 2023, recording a 38.6 percent decline in deals compared to the previous year. According to data from GlobalData, a leading analytics company, only 920 VC funding deals were announced in India between January and October 2023, a stark contrast to the 1,499 deals in the same period in 2022.
The corresponding value of VC funding nosedived by a staggering 67.1 percent, plummeting from $19.2 billion in January-October 2022 to $6.3 billion during the same period in 2023. Analysts attribute this sharp decline to cautious investor behavior amid growing concerns surrounding homegrown startups like Byjus.
Despite this downturn, India maintains its position among the top five global markets for VC funding activity and remains a significant market in the Asia-Pacific (APAC) region, closely trailing China in both deal volume and value.
During January-October 2023, India accounted for 5.4 percent of the total global VC funding deals and held a 3.1 percent share of the disclosed deal value, signaling a consistent albeit reduced presence in the global investment landscape.
An analysis of GlobalData’s Financial Deals Database highlights that despite the prevailing cautious sentiment, India saw the announcement of several substantial VC funding rounds surpassing $100 million in 2023.
Key among these were the $250 million fundraising by PhysicsWallah, $229 million by Perfios Software Solutions, $200 million by PhonePe, $200 million by Zepto, and $120 million by Zetwerk.
The ability of Indian startups to secure notable funding rounds exceeding $100 million underscores a resilient entrepreneurial spirit, demonstrating the enduring allure of India’s startup ecosystem despite investor caution, Aurojyoti Bose, Lead Analyst at GlobalData, said.
The decline in VC deals and funding value underscores the current challenges faced by Indian startups in securing investment. However, the ability to attract substantial funding amidst this cautious climate portrays a promising outlook for the country’s entrepreneurial landscape.