The dampened funding environment which began two years ago continues. Domestic tech startups saw a 13% decline in funding in the first half of the current calendar year (January-June) to $4.1 billion, according to Tracxn data. The firms had raised $4.8 billion in the same period in 2023.
The decline in funding was across stages. While seed stage funding dropped 17.3% year-on-year in the first half of this year, funding in early-stage startups was down 28% and that in late-stage companies was slightly lower by 1.3%.
Despite four consecutive half-year periods of declining funding since H1 2022, we are now showing signs of stabilization, going upward, Neha Singh, co-founder, Tracxn, said.
However, when compared to the second half of 2023, the funding scenario has improved in the first half of this year. Overall funding increased by 4% from $3.96 billion in the second half of last year, while across stages, too, funding saw an uptick.
April saw the highest monthly funding of $862 million in the first half of 2024, while January had seen the highest funding of $1.41 billion in H1 of last year. So far this year has seen eight $100 million-plus funding deals, while companies such as Flipkart, Apollo 24|7 and Meesho have managed to raise funds above $250 million during this period.
Three startups – Zepto, InCred Finance, and Porter – became unicorns among Indian startups in the first half of this year. Globally, 36 unicorns were minted during this period. Unlike the slump in funding, the number of IPOs rose significantly to 17 in the first half of 2024, from 6 in the same period in 2023 and 12 in the second half of 2023.
Investors have noted that several late-stage companies are opting to go public instead of waiting for a venture capital check in a dampened funding environment, as public markets are offering better multiples.
The top investors in the first half of this year were Accel, Blume Ventures, and Peak XV Partners. Overall, South-east Asian startups have seen a slight increase in funding in the first half of this year, after four consecutive half-year periods of declining funding since H1 2022.
The second half of this year might show signs of an improvement in funding, as several late-stage startups are in talks to raise big checks, including Zepto, which is finalizing a $650 million round.
