During the first half of 2023, the Indian Startup Ecosystem faced a significant setback in venture capital (VC) funding activity, resulting in a noticeable impact on the overall value, as per GlobalData, a prominent data and analytics company.
The report highlights that a total of 568 VC funding deals worth $3.7 billion were announced in India during this period. This represents a substantial year-on-year (YoY) decline of 43.3% in terms of deals volume and a staggering 76.4% decline in terms of overall funding value.
Comparing it to the first half of the previous year, the total funding value in India during H1 2023 was more than four times lower. In H1 2022, Indian startups had successfully raised $15.8 billion across 1,002 VC funding deals, as per the analysis of GlobalData’s Financial Deals Database.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Owing to the challenging economic scenario, investor sentiment had a dent globally. As a result, several key global markets, including India, have experienced subdued VC funding activity. The steep decline in funding value could also be signal of prolonged funding winter and severity of investor cautiousness.”
Bose adds: “Apart from macroeconomic challenges and recession fears, concerns around startup valuations also seem to take a toll on investor sentiments in the country. In fact, the impact in India, which happens to be among the top five markets globally in terms of both VC funding deal volume and value, also seems to be relatively more prominent compared to the US, China and the UK.”
For instance, VC funding deal volume for the US, China and the UK declined by 34.7%, 15.8%, and 28.6% in H1 2023, respectively, compared to the same period in the previous year. The decline in corresponding value for these markets was even relatively lesser, standing at 49.2%, 36.3% and 54.7%, respectively.