The decline in venture capital (VC) funding for Indian startups during April 2024 highlights the persistent challenge of slower capital inflow faced by the ecosystem. Compared to the same period last year, VC funding decreased by 12.6%, amounting to $848 million, down from $971 million. Similarly, there was an 8% decline compared to March 2024, where funding stood at $921 million.
Why has VC Funding Reduced
This decrease in funding is attributed to the absence of large deals, reflecting the prevailing "funding winter" environment. Despite a steady increase in VC funding during the first three months of 2024, the ecosystem has struggled to reach the billion-dollar mark monthly since October 2023, which is seen as a significant milestone.
Although the number of deals increased to 111 in April from 86 in March, most activity was concentrated in the early-stage category, with lower funding amounts. Only one deal crossed the $50 million mark, led by Parsons Nutritionals raising $80 million. Late-stage funding, which typically involves larger sums, remained subdued but is anticipated to pick up momentum in the coming quarters.
Where do the 'Figures' Stand
In terms of funding distribution, the growth category received the highest amount at $357 million, followed by debt financing at $222 million. Fintech emerged as the top-funded segment, followed by manufacturing, SaaS, and cleantech, with increased investor interest observed in the cleantech sector.
There was a shift in the cities receiving the highest funding, with Delhi-NCR leading the list, followed by Bengaluru and Mumbai. Despite Bengaluru's reputation as the startup capital, this change indicates evolving investment trends.
Industry observers anticipate a rebound in VC funding during the last quarter of the year, with funds poised to deploy capital once favourable conditions prevail. Overall, while VC funding remains challenging, there is optimism for improved investment activity shortly.
