December 28, 2023
Despite the end-of-year funding surge, the overall funding for India's startups in 2023 remains at a seven-year low
Indian startups gained US$ 8.8 billion in 2023
Late-stage deals have been a focal point in December, constituting over 85% of the fund flows
Secondary flows and impetus could automatically contribute to increased growth-stage funding
December 2023 has emerged as the most active month for risk capital investors, with funding announcements surpassing US$ 1.5 billion, according to data compiled by Tracxn.
The current month’s funding exceeded January’s US$ 1.4 billion, the highest for the year until December 26.
Despite the end-of-year funding surge, the overall funding for India’s startups in 2023 remains at a seven-year low, totalling US$ 8.8 billion. Monthly funding had remained at the billion-dollar mark since March of the same year.
Late-stage deals have been a focal point in December, constituting over 85% of the fund flows, contrary to the broader trend of a slowdown in growth- and late-stage funding. This surge is attributed to a few substantial deals, including the US$ 600 million investment in the e-commerce marketplace Flipkart by the US-based retail giant Walmart. This forms part of Flipkart’s ongoing US$ 1 billion funding round, as reported by ET on December 21.
Other notable transactions in December include the US$ 340 million fundraise by the B2B e-commerce marketplace Udaan, led by UK savings and investment firm M&G Prudential. GreyOrange, a warehouse automation startup, also secured a noteworthy US$ 135 million funding round led by Anthelion Capital.
December’s commitment to funding is nearly double that of November, which recorded approximately US$ 800 million and is 15% higher than the US$ 1.3 billion recorded in the same month of 2022.
The data encompass primary and secondary deals and funds raised through debt and convertible instruments. Investors note that deal closures have taken longer this year, with some announcements representing deals concluded months ago. The extended timelines are attributed to more comprehensive investor due diligence and increased caution, coinciding with corporate governance issues in the Indian startup ecosystem.
Regarding the potential for a sustained recovery in funding, industry experts suggest that secondary flows and impetus could automatically contribute to increased growth-stage funding.
Source: Economic Times