Indian startups registered a steady growth in fund inflow during the first quarter of 2023 as they managed to cross $2.75 billion in funding. Importantly, funding in March stood out for crossing the $1 billion threshold for the first time in 2024. However, even as funding recovers, layoffs, shutdowns, and departure of top-level executives continue to loom.
Indian startups mopped up $2.77 billion across 326 deals in the March quarter or Q1 2024, as per data compiled by TheKredible. This included 74 growth-stage deals worth $1.87 billion and 213 early-stage deals amounting to $898 million. There were 39 undisclosed rounds.
Unlike in the first quarter of 2023, two startups – Krutrim SI Designs and Perfios – entered the unicorn club after their latest fundraise in the first quarter of 2024.
March saw a decent jump in funding to $1.18 billion from $875 million in February and over $700 million in January. However, on a year-on-year basis, Q1 2024 recorded a fall from $12 billion in Q1 2022 and $3.4 billion in Q1 2023.
Biotech startup Engrail scooped up $157 million in its Series B funding round to become the top-funded growth stage company in the first quarter of 2024. Audio series platform Pocket FM and logistics company Shadowfax managed to go past the $100 million funding mark in Q1 2024.
Digital lending platform mPokket, AI company Krutrim, energy tech company International Battery Company (IBC), blockchain company Avail, and generative AI startup Ema topped the list of early-stage startups.
City-wise, Bengaluru-based startups remain on top with 122 deals, contributing around 54% of the overall funding in the first quarter of 2024. Delhi-NCR and Mumbai followed with 77 and 54 deals, respectively.
Segment-wise, e-commerce startups (including D2C brands) led the list with 64 deals followed by fintech (47), healthtech (31), SaaS (26), EV (15), AI (13), and edtech (13) startups.
Series-wise, 95 startups raised funding in Seed round followed by 71 Series A, 35 Pre-Series A, and 33 Pre-seed deals. Among early-stage, as many as 4 startups raised funding in their angel round. Layoffs continued in the March quarter as more than 1,100 employees received pink slips. Among them, foodtech company Swiggy topped the list with laying off of 350 employees followed by Cult.fit, InMobi, and Pristyn Care with 150, 125 and 120 employees, respectively.
During the first quarter, five companies shut their operations. The list includes Resso, Rario, OKX India, GoldPe, and Muvin. Nearly two dozen top-level executives hung up their boots. Vijay Shekhar Sharma, founder of Paytm Payments Bank, resigned as the part-time non-executive chairman and board member of the company.
Amid all the ups and downs, the startup ecosystem witnessed employees stock buyback by growth and late-stage companies. For context, e-commerce company Meesho rolled out its largest ESOP buyback worth $25 million for 1,700 employees. Community management app MyGate and edtech company Classplus also announced their employee stock buyback program earlier this year.
The strength in fintechs continues, and the category will continue to seek more money and throw up the next big startups, as scale arrives faster for many. Newer categories, be it AI, Chip Design, or niche parts of healthtech look set to emerge soon, going by the churning in the markets. The big hope is that the many corporate governance issues that have plagued the ecosystem in the past two years will also take a backseat now, thanks to lessons learnt hopefully. Looking at the numbers, especially for Q1 2022 ($12 billion), many would say that opportunities and capital have been wasted. But that is the very nature of the Startup world, with tiny amounts of money and a dollop of innovation sometimes achieving what no amount of money thrown at a problem doesn’t. We remain optimistic that by Q4 of this year, India’s startup ecosystem will be stronger and more diversified than ever before.
