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The funding environment in India remains challenging, however, the last week of May saw some excitement as venture capital funding into Indian startups was boosted by a large PhonePe deal.

The fourth week of the month saw total venture funding of $231 million cutting across 14 deals, helped by $100 million infusion into the fintech giant. In comparison, the previous week saw a total inflow of $128 million.

However, despite help from PhonePe, the funding drought in the Indian startup ecosystem isn’t going away anytime soon as macroeconomic conditions remain uncertain with Germany entering a technical recession and the Russia-Ukraine war continuing to drive inflation.

This is also reflected in the other developments in the startup ecosystem, with the fourth-quarter results of companies such as Nykaa and Info Edge not impressing anyone. Nykaa saw its net profit drop by 71% while InfoEdge reported a net loss for the first time in six years. This reveals the difficult economic environment.

At the same time, the government also came out with new regulations surrounding angel tax. Though it gave a lot of flexibility, there are still some provisions which may act as a hindrance for the capital inflow into the country.

It remains to be seen how the remaining seven months are going to pan out for the Indian startup ecosystem as the macroeconomic indicators do not offer a positive outlook. There is also no clarity on whether the US Federal Reserve will bring a pause on the interest rate hikes which have a big say in how money flows across the world.

Key deals

As part of an ongoing $1-billion fundraise, PhonePe has received $100 million from General Atlantic. This infusion takes the total fundraise to date to $850 million.

Bus tracking and ticketing startup Chalo raised $45 million from Avataar Ventures, Lightrock India, Waterbridge Ventures, and Amit Singhal, Head of Google Search.

D2C startup Hopscotch raised $20 million from Amazon, Eduardo Saverin, Co-founder of Facebook, Lionrock, IIFL Seed Venture Fund, RPG Ventures, and Techpro Ventures.

IoT startup Infinite Uptime raised $18.85 million from Tiger Global, GSR Ventures, VenturEast, Mayfield, and THK.

Pune-based Walko Food, which owns the ice cream brand NIC, raised $11 million in a growth funding round led by Jungle Ventures.

XFlow, a financial services and infrastructure company, raised $10.2 million from Square Peg Capital, Moore Strategic Ventures, Lightspeed, and General Catalyst.