Indian startups have witnessed a 17% increase in funding rounds worth over USD 100 million in the first half of 2023, according to data from Tracxn. This rise indicates a positive trend for the startup ecosystem. In the previous year, the number was 12, but it improved to 14 in the first half of 2023. Prominent startups that secured significant funding include BYJU’S, Lenskart, Phonepe, and Ola Electric.
BYJU’S, an edtech platform offering multidisciplinary learning solutions for students, raised a total of USD 700 million in several Series G funding rounds during Q1 2023. This funding round valued the company at USD 5.1 billion. PhonePe, a wallet-based payment app, also performed well, raising USD 650 million in multiple Series D rounds in Q1 2023. PhonePe’s valuation reached USD 12 billion as a result. Lenskart, an online eyewear retailer, secured USD 600 million in a Series J funding round led by the Abu Dhabi Investment Authority (ADIA), valuing the company at USD 4.5 billion.
However, despite the overall positive trend, late-stage funding rounds faced certain challenges. Tracxn data shows that late-stage funding in the first half of 2023 plummeted by 71% compared to the first half of 2022, and by 11% compared to the second half of 2022. Major investors in late-stage rounds included Filter Capital, ASVF, and Avataar Ventures.
Ankit Kedia, Founder and Lead Investor at Capital A, stated that although the market scenario has changed, funding opportunities still exist for meaningful startups, especially in the early stages. He emphasized that startups need to demonstrate a clear roadmap to profitability and sound financial management to attract investors. Kedia believes that the funding outlook for the future is positive, with a potential increase in funding deals in the latter part of the year, particularly in domains such as fintech, wealth-tech, sustainable businesses, and climate tech.
Amitabh Kant, the G20 Sherpa from India, shares a similar view, stating that there is no financial winter in the startup industry. He believes that there are abundant funds worldwide, actively seeking well-organized and worthwhile projects.
In conclusion, the first half of 2023 has seen an encouraging increase in funding rounds worth over USD 100 million for Indian startups. This reflects the resilience and potential of the country’s startup ecosystem. While late-stage funding faced challenges, there is still optimism for startups that can demonstrate a clear path to profitability. As the year progresses, investors are expected to increase their funding activity, particularly in sectors like fintech and sustainable businesses. The future looks bright for Indian startups as they continue to drive innovation and growth in the market.
