Venture capital (VC) funding in Indian startups has undergone a significant downturn, experiencing a 67.1% decline in value, plummeting from $19.2 billion in January-October 2022 to $6.3 billion in the corresponding period of 2023, according to a comprehensive report by data and analytics company GlobalData. The study reveals that this decline is coupled with a 38.6% drop in the number of VC funding deals, with 920 deals announced in January-October 2023 compared to 1499 in the same period of the previous year.
Auro Jyoti Bose, Lead Analyst at GlobalData, attributed this challenging trend to cautious investor sentiment in 2023, as concerns around certain homegrown startups, including Byjus, have led investors to tread carefully. The decline in funding value indicates a pullback by VC firms from substantial investments, making it a formidable task for startups to raise capital in the current scenario.
Despite these challenges, India remains among the top five global markets for VC funding activity, accounting for 5.4% of the total number of VC funding deals announced worldwide during January-October 2023. Moreover, India's share of the disclosed deal value reached 3.1%, showcasing its significance in the Asia-Pacific (APAC) market. Notably, India closely follows China in VC funding deal volume and value in the APAC region.
GlobalData's Financial Deals Database analysis also highlights some resilient aspects of India's startup ecosystem. Despite subdued investor sentiments, several VC funding rounds exceeding $100 million were announced in 2023. Standout deals include PhysicsWallah securing $250 million, Perfios Software Solutions raising $229 million, PhonePe obtaining $200 million, Zepto securing $200 million, and Zetwerk raising $120 million.
Aurojyoti Bose concluded that the ability of Indian startups to secure noteworthy funding rounds exceeding $100 million signifies a resilient entrepreneurial spirit. This underscores the enduring attractiveness of India's startup ecosystem, even in the face of cautious investor sentiment. The data indicates that, while challenges persist, the Indian startup landscape remains dynamic and continues to draw substantial investment.