VC funding in India down by more than half to $7.8 billion in 2023

VC funding in India down by more than half to $7.8 billion in 2023

Indian startups went through a harsh funding winter during 2023, resulting in a massive drop in venture capital (VC) activity, with the impact being more prominent in terms of value, which fell by more than half compared to 2022. A total of 1,085 VC funding deals worth $7.8 billion were announced in India in 2023. This represents a decline of 37.9% in terms of VC funding deals volume compared to the announcement of 1,748 deals during 2022. Meanwhile, the decline in terms of value stood significantly high at 63% compared to $21.2 billion worth of VC funding deals announced during 2022, according to GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Deals Database also revealed that while the total VC funding value in India did not even reach $10 billion during 2023, it took only four months to hit the same level during the previous year.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The funding winter, which started in the last quarter of 2021, continued to prevail thereafter but was much harsher for 2023. Apart from several factors such as macroeconomic challenges, ongoing conflicts, and geopolitical tensions, concerns around startup valuations also had a major dent in investor sentiments for India. This seemed to have resulted in a dramatic shift in focus towards sustainable growth and profitability.”

“Nevertheless, there are some bright spots as well, and the environment is not so gloomy for startups with a clear roadmap and strong fundamentals. Funding secured by some of the startups despite challenging conditions is indicative of this.”

Some of the notable VC funding deals announced in India during 2023 included $340 million worth of funding raised by Udaan, $229 million of funding secured by Perfios Software Solutions, $200 million raised by PhonePe, and $200 million of funding received by Zepto, among others.

Bose adds: “Despite the setback, India continues to be a key Asia-Pacific (APAC) market for VC funding activity, standing just next to China. Moreover, it is also among the top five markets globally in terms of both VC funding deal volume and value.”

India accounted for a 5.6% share of the total number of VC deals announced globally during 2023, while its share of the corresponding deal value stood at 3.3%.

Note: Historic data may change in case some deals get added to previous months because of a delay in the disclosure of information in the public domain