Decline in Startup Funding
According to Tracxn data, domestic tech firms in India saw a 13% reduction in investment during the January–June 2024 period. From $4.8 billion for the same time in 2023 to $4.1 billion overall, funding fell. This decrease is indicative of a two-year-old trend of financial reductions.
Drop in Funding Rounds
A notable decline was also observed in the quantity of fundraising rounds, which dropped from 989 in the first half of last year to just 540 in the same period this year, a 54% decrease. This drop was seen in startup funding at every stage.
Seed Stage and Early-Stage Funding
Early-stage startup financing decreased by 28%, while seed stage funding decreased by 17.3% annually. The amount of money invested in late-stage businesses fell by 1.3%. There are indications of stabilization and maybe rebound in spite of these decreases.
Signs of Stabilization
Despite four consecutive half-year periods of decreased investment since H1 2022, Neha Singh, co-founder of Tracxn, observed that there are currently indications of stabilization and an increasing trend. Overall financing rose from $3.96 billion to $4.96 billion in the second half of 2023, a 4% rise, suggesting that the financial environment has improved.
Monthly Funding Highlights
The largest monthly funding for the first half of 2024 was $862 million in April. When comparing January 2024 to the same month in the previous year, the greatest funding amount was $1.41 billion. Eight transactions have crossed the $100 million threshold thus far, with big businesses including Flipkart, Apollo 24|7, and Meesho raising large sums of money.
Top Funding Recipients
Flipkart raised the highest amount at $350 million, followed by Apollo 24|7 at $297 million and Meesho at $275 million. Startups in the retail, enterprise applications, and fintech sectors attracted the most funding during this period.
New Unicorns and IPOs
Three startups—Zepto, InCred Finance, and Porter—achieved unicorn status in the first half of 2024. Globally, 36 new unicorns were minted during this period. Despite the funding slump, the number of IPOs rose significantly to 17 in the first half of 2024, compared to 6 in the same period in 2023 and 12 in the second half of 2023.
Shift to Public Markets
Investors have observed that several late-stage companies are opting to go public rather than waiting for venture capital funding. Public markets are currently offering better multiples, making IPOs a more attractive option for these companies.
The top investors in the first half of 2024 were Accel, Blume Ventures, and Peak XV Partners. Southeast Asian startups also saw a slight increase in funding after four consecutive half-year periods of decline since H1 2022.
Outlook for the Second Half of 2024
There are expectations of an improvement in funding in the second half of 2024. Several late-stage startups, including Zepto, are in talks to raise significant amounts, with Zepto finalizing a $650 million round.
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