Indian startups may take more time to recover from the so-called ‘funding winter’ as investment in homegrown companies again saw a sharp decline in November. A clutch of late-stage deals including a pre-IPO round pushed the total funding to more than $640 million.
Data compiled by TheKredible shows that 102 startups raised $643.6 million in November as compared to $1.24 billion in the previous month (October). This is a 48% month-on-month decline in terms of amount raised. This includes 12 growth stage deals worth $395.1 million and 70 early stage deals worth $248.5 million. As many as 20 startups did not disclose their transaction details.
[Month-on-Month trend]
After crossing the $1 billion funding mark for two consecutive months (September and October), November became the fourth lowest funded month in 2023. Comparing it with the past three years’ trend, November 2023 ranked the lowest in terms of total funding. Overall, the total funding in 2023 stood at $9.6 billion and 2023 is likely to end with a little over $10 billion. To recall, Indian startups raised a mammoth $25 billion in 2022 and $38 billion in 2021.
[Top 10 growth stage deals]
D2C brand MamaEarth, which recently listed on stock exchanges, raised $91 million in a pre-IPO round and stood at top among growth stage/late stage companies. Logistics company XpressBees scooped up $80 million in its Series G round whereas aerospace equipment manufacturer Aequs raised $54 million in a private equity round and dental clinic chain Clove Dental picked up $50 million in Series E funding.
Quick commerce platform Zepto raised another $31.25 million after raising a $200 million unicorn round in August. Rest of the startups in the top 10 growth stage list raised less than $30 million each.
[Top 10 early stage deals]
While there is a decline in growth stage deals, early stage startups raised more funding in November than the previous month. Fintech firm Scapia raised $23 million in its Series A funding round and stood at the top. Vridhi Home Finance raised $18 million followed by Bakingo, Bharat Housing Network and decor startup Snaptrude which raised $16 million, $14.5 million and $14 million respectively.
Check TheKredible for more details and the full database.
[Stage wise deals]
In November, the seed stage saw 37 deals while Series A and Angel rounds saw 18 and 12 deals, respectively. This was followed by 10 pre-Series A, 5 bridge round, 5 pre Seed deals.
The complete breakdown can be seen in the chart below:
[City and segment]
City wise, Bengaluru saw 30 deals worth $165 million. However, Delhi-NCR-based startups raised nearly $300 million across 28 deals and accounted for 46% of the total funding. Mumbai, Pune and Chennai were next on the list.
In terms of segment, E-commerce startups dominated the chart with 21 deals amounting to $151 million followed by fintech startups which raised $107 million in 14 deals. Interestingly, agritech and edtech did not find place in the top five list and raised only $4 million and $2 million respectively.
[Mergers and acquisitions]
The number of mergers and acquisitions remained the same in November when compared to October. Global tech platform Adobe acquired Indian startup Rephrase.ai whereas Amagi took over SaaS company Tellyo and agritech DeHaat acquired Freshtrop. The complete list can be seen here.
[Startup-focused funds]
While November did not see any large fund announcement, a bunch of mid size funds announced their new fund raise. This includes Rategain’s $72 million fund, Pantomath’s $60 million fund and Lighthouse Canton’s $41 million fund.
[Layoffs and departures]
Layoffs and shutdowns, once again, saw an upward trend in November. As per data compiled by TheKredible, more than 850 employees were laid off in the last month as compared to 500 in October. Two edtech startups Byju’s and PhysicsWallah collectively fired 720 employees. Gaming streaming company Loco also fired 40 employees. Meanwhile, a couple of startups including Anar and OSlash announced their shut down.
[Conclusion]
Whole the slide in numbers might even look alarming to some, the reality is that momentum is a real thing, and it takes time to change direction. We have written in these reports on how expecting a real return to large inflows (relatively) before early 2024 might be tough, and we stick to that view. Even if we look at the picture right now, a clutch of startups were in talks to raise larger rounds. For context, fintech company BharatPe was in talks to raise $100 million. Moreover, NBFC Incred also said it is raising a new round at unicorn valuation. B2B e-commerce Udaan, agritech Waycool, quick commerce company Dunzo, and The Sleep Company, were also in talks to raise a new round. Some of the deals may close in the next month, some might take longer.
In the meantime, besides Fintech which is due an IPO or two in 2024, the successful IPO of a Mamaearth or even Paras Defense have provided VCs the kind of returns that reaffirm trust in whole markets. Strong narratives will continue to attract funds, especially if interest rates soften in the US as is being predicted in 2024. The latest GDP numbers will also be a strong reminder to many of the possibilities in India, with the only uncertainty possibly being the May general elections next year. But even that won’t really keep away serious players making long term bets on Indian entrepreneurs.
