Indian startups raise US$ 2 bn in Q1 of FY24: Tracxn

This figure reflects a 40% decrease compared to the US$ 3.3 billion raised in the same quarter last year

April 23, 2024

Despite the decline, a closer look at quarterly funding trends reveals a consistent picture for the startup ecosystem

Funding levels in the preceding quarters of Oct-Dec 2023 and July-Sept 2023 also hovered around the US$ 2 billion mark

Activity in seed and early stages has been picking up and experts anticipateincreased action in growth and late stages post-elections

Investors are proceeding with caution and conducting rigorous evaluations, but growth and late-stage deals are still happening

Indian startups managed to secure US$ 2 billion in funding during the first quarter of the year, as per data from market research firm Tracxn. This figure, however, reflects a 40% decrease compared to the US$ 3.3 billion raised in the same quarter last year.

Despite the decline, a closer look at quarterly funding trends reveals a consistent picture for the startup ecosystem. Funding levels in the preceding quarters of Oct-Dec 2023 and July-Sept 2023 also hovered around the US$ 2 billion mark. This stability indicates that the ecosystem, which has been grappling with a slowdown in investments over the past 12-18 months, is maintaining its pace.

Investors are optimistic that the funding winter may be thawing, anticipating a surge in deal activity in the second half of the year. Activity in seed and early stages has been picking up and experts anticipateincreased action in growth and late stages post-elections.

India has already welcomed two new unicorns in 2024 – Bhavish Aggarwal’s AI venture Krutrim and fintech SaaS, Perfios. While the funding scenario may not return to the heights of 2021 when startups raised nearly US$ 40 billion, investors are now seeking sustainable business models.

Experts have noted that investors are looking towards sectors like deeptech and AI for more defensible opportunities. The funding landscape saw a notable increase from US$ 462 million in January to over US$ 750 million in February and March. This growth was supported by a rise in domestic investors and micro-VCs participating in early-stage deals. There has been traction in companies raising their first institutional rounds, such as Series A and B.

Investors are proceeding with caution and conducting rigorous evaluations, but growth and late-stage deals are still happening. Sectors such as quick commerce are attracting significant interest, with companies like Zepto reportedly negotiating new rounds of funding. Down rounds are not anticipated unless a company is in urgent need of funds. It is expected that several late-stage companies will approach the end of their investment life cycles, leading to numerous secondary deals.

Source: Times of India

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