India’s share in total global venture capital (VC) funding declined to 2.9 per cent in calendar year 2023, falling to $7.3 billion, the lowest since calendar year 19. Most of the startups were seen struggling to raise funds. The reason was that they did not want to compromise with their old assessment.
According to CB Insights’ global data on VC funding, funding received by Indian startups dropped by almost one-third compared to CY22. Then it had reached $20.6 billion and accounted for 4.8 percent of global funding. Although the data shows that there were 71 new unicorns in the world (21 in Asia), there were only two unicorns from India, compared to 22 in CY22.
India’s share in total deals has also seen a decline, standing at only 3.6 per cent of all global deals during CY23. This share was 4.2 percent in calendar year 22. In the fourth quarter of 2023, there was only one such deal in India, which was in the list of top 10 global deals. It was a case of raising money at a low valuation of Udaan.
The nature of funding has also changed. The share of late-stage funding was 9 per cent in CY23, compared to 12 per cent in the previous year. The share of mid-stage funding also declined by two per cent, but the share of early-stage funding increased by three per cent from 75 per cent in CY22 to 78 per cent in CY23.
Startups with late-stage funding have found it difficult to raise money without reducing their valuations or have been told to come in for funding only when they become profitable. Most VCs focused on funding small startups with low risk.
Despite all the turmoil in its economy, China performed much better than India. It managed to raise VC funding of $27.4 billion in CY23, although this too saw a sharp decline. This figure of $27.4 billion was one-fourth less than in CY22, when China had crossed the $100 billion mark. As a result the gap between countries in the share of funding has narrowed.
First Published – January 22, 2024 | 8:55 PM IST
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