The month of July has no upswing to offer to the Indian startup ecosystem as for two consecutive weeks, venture capital funding did not cross the psychologically important threshold of $100 million.
The third week of July saw total VC funding inflow into the Indian startup ecosystem at $64 million, cutting across 13 deals. In the comparable previous week, the number stood at $66 million. Effectively there was not much movement on a weekly basis.
This is the eighth time in 2023 that VC funding dropped below $100 million and going by the trends, it looks like the total funds raised will end much lower than in 2022.
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This steady decline in the funding raised by the Indian startup ecosystem is largely due to the near absence of large deals and investors not willing to put their money into late-stage deals. During this year, only companies like PhonePe and Lenskart could raise substantial large sums of money but these are far and few in between.
Despite VC firms raising new funds which have now totalled over $3 billion this year, it is unlikely that they will be deployed anytime soon. The most likely probability of VC firms opening their purse will be from next year.
In addition, the negative developments surrounding several companies struggling to raise fresh capital and resorting to job cuts are not likely to enthuse investors. A case in point is Dunzo, the hyperlocal delivery startup facing severe cash crunch issues.
The ongoing funding winter is not good news for the ecosystem but there are lessons to be learnt in terms of building sustainable businesses and valuations being reasonable.
Key transactions
Autonomous industrial robots maker Ati Motors raised $10.85 million from True Ventures, Blume Ventures, Exfinity Ventures, and MFV Partners.
Insurtech startup RenewBuy raised $40 million from Dai-ichi Life Holdings as part of its ongoing Series D fundraise.
Solethreads raised $3.7 million from Fireside Ventures, DSG Consumer Partners, and Saama Capital.
Edited by Kanishk Singh
