India’s venture capital (VC) funding witnessed a 46.1 per cent year-on-year (YoY) drop in deal volume and a 74.6 per cent decline in funding value in the first five months of 2023, according to GlobalData, a data and analytics company.
Data revealed that 459 VC funding deals worth $3.4 billion were announced in the country during January–May 2023, compared to the 851 VC deals worth $13.3 billion announced from January–May 2022.
“The massive decline in funding value reflects the magnitude of the impact that the funding winter had on India. With macroeconomic challenges, mounting recession fears, and ongoing geopolitical tensions still prevalent, it seems to be a prolonged and harsh funding winter for the country,” said Aurojyoti Bose, Lead Analyst at GlobalData.
However, the country remains a key Asia-Pacific (APAC) market for VC funding activity and stands just next to China in terms of deal volume and value. According to the report, India held a 16.4 per cent share of the total number of VC deals announced in the APAC region from January to May 2023, while its share of the corresponding deal value stood at 13 per cent.
Additionally, the country is also among the top five markets globally. It held a 5 per cent share of the total number of VC deals announced globally from January to May 2023, while its share of the corresponding deal value stood at 3.2 per cent.
Some notable VC funding deals announced during this period included around $250 million worth of fundraising by PhysicsWallah, $200 million secured by PhonePe, and $120 million worth of fundraising by KreditBee.
Though the funding winter experienced by the country’s venture capital landscape in early 2023 has undoubtedly been severe. However, it remains a resilient and promising market both at regional as well as global levels, Bose noted.