Start-up funding in India falls by 36% in January-June

Funding in Indian startups fell by 36 per cent in January-June, the lowest half-yearly figure in four years, according to a PwC India report. The Indian startup ecosystem reported the highest six-month funding in the last four years of H 1 CY 23 at USD 3.8 billion across 298 deals - a drop of nearly 36 percent as compared to H 2 CY 22 at $5.9 billion, Fintech SAAS and D 2 C, the most funded sectors in H 1 CY 23. Despite challenging funding conditions, investors have demonstrated strong support for their portfolio companies by doubling down on their investments in companies that showed positive growth, the report said. As for the investment outlook for Indian startups, Amit Nawka, PwC India's partner-deals leader, said a funding winter is just a season in a startup's journey. Despite significant untapped capital reserves held by venture capitalists VCs Active VC firms in India, there is a slowdown in startup funding despite significant Untapped Capital Reserves that have secured new funds in the past year, and we can expect the pace of investments to pick up in the next few months. In the interim, investors have increased due diligence as well as coverage - from typical finance and legal to areas such as technology, HR and business processes - to ensure that the startups have a robust corporate governance framework, Nawka said. The report further said that venture capital VC funding declined in H 1 CY 23 and M&A transactions remained the same when compared to H 2 CY 22. Eighty M&A deals affecting start-ups were executed in H 1 CY 23. Of those, 80 percent were domestic transactions and the rest were cross-border transactions. similar to the VC funding activity, SaaS 23 FinTech 11 and e-commerce and D 2 C 10 continue to witness the largest number of M&A transactions during H 1 CY 23. On sector-wise investment, the company said SaaS, D 2 C, FinTech, e-commerce B 2 B and Logi and AutoTech remain to be the top five investment sectors based on the funding received in the first half of the year. These contribute to about 89 per cent of the total funding received in H 1 CY 23 in value terms. PwC India's report notes that Bengaluru NCR and Mumbai are among the key start-up cities in India, representing around 83 percent of the total start-up funding activity in H 1 CY 23. A decline in funding activity across all cities in H 1 CY 23 barring Chennai, which witnessed more funding in the SaaS space, the report said.