Venture capital (VC) funding activity in India experienced setback during the first half (H1) of 2023 but the impact was very prominent in terms of value.
A total of 568 VC funding deals of worth $3.7 billion were announced in India during the period.
This represents a year-on-year (YoY) decline of 43.3% in terms of deals volume and a massive 76.4% in terms of value, according to GlobalData.
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.”
In fact, the total funding value in India during H1 2023 was down by more than four times compared to the total funding value for H1 2022.
An analysis of GlobalData’s Financial Deals Database revealed that Indian startups raised $15.8 billion across 1,002 VC funding deals in H1 2022.
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.