Funding for Indian startups falls 25% in October to $1.2 Bn

Indian startups once again crossed the $1 billion funding threshold in October, driven by a few major deals in edtech, e-commerce, and NBFCs, along with several debt deals. Although there were no stock market listings from the startup ecosystem in October, Swiggy and a few other companies are anticipated to go public this month. This signals a growing confidence among investors despite ongoing macroeconomic challenges.

According to data compiled by TheKredible, homegrown startups raised nearly $1.2 billion across 119 deals in October. The growth and late-stage funding segment comprised 28 deals, contributing $846.2 million to the total funding amount, while early-stage startups also garnered significant attention, securing $355.38 million across 65 deals.

[M-o-M and Y-o-Y trend]

On a monthly basis, October saw more than 25% decline in funding from $1.62 billion in September. On a yearly basis, the decline in October was 13%. However, total funding during the first 10 months of 2024 stood at $12.2 billion, surpassing 2023’s $11 billion. The trend can be seen below:

[Top 10 growth stage deals]

Growth-stage startups contributed 70% to the overall funding in October. Leading this list was Eruditus with its $150 million Series F round, followed by Finova Capital with $135 million in Series E funding. Other notable deals included Purplle, upGrad, and Neuron7.ai.

[Top 10 early-stage deals]

Early-stage deals have been making headlines in the past few months, as more than half a dozen seed-stage companies have raised over $20 million. Adding to this list, fintech company Zinc and elder care startup Primus Senior Living raised $25.5 million and $20 million in their seed rounds, respectively. However, the list was led by Tripfactory, Mstack, and Neysa, which secured $50 million, $40 million, and $30 million in their Series A funding, respectively.

[Mergers and Acquisitions]

The merger and acquisition activity in October was primarily driven by IT and software companies acquiring startups to bolster their technological capabilities. Notable deals from the startup ecosystem included OTA firm Ixigo acquiring a majority stake in Zoop Web Services, a travel booking platform, and D2C meat and seafood brand Licious acquiring the offline retailer My Chicken and More. 

[City and segment-wise deals]

In terms of city-wise funding, Bengaluru-based startups led with 46 deals totaling $502.72 million, representing 41.84% of the total funding in October. Mumbai-based startups followed with 26 deals, raising $339.11 million and contributing 28.22% to the total funding. Startups in Delhi-NCR completed 25 deals amounting to $85.52 million, capturing 7.12% of the total funding. In a rare instance, Mumbai surpassed Delhi in terms of the total number of deals. Chennai and Pune were next on the list.

Segment-wise, fintech startups led the show in terms of the amount raised with 13 deals, securing $245.98 million and contributing 20.47% to the total funding. This was followed by the e-commerce sector, which recorded 24 deals worth $208.48 million, representing 17.35% of the total funding. Edtech was close behind with 6 deals, raising $225 million and contributing 18.73%. Healthtech had 15 deals amounting to $93.25 million, accounting for 7.76% of the total. AI startups rounded out the list with 6 deals totaling $83.9 million, making up 6.98% of the funding. Visit TheKredible for more details.

[Stage-wise deals]

Regarding funding stages, 50 startups raised capital in the seed round, 19 in Series A, 11 in pre-Series A, and 11 in Series B. Debt-only funding accounted for 9.99% of the total funding for the month. For a complete breakdown of stage-wise deals, refer to TheKredible’s detailed report.

[Layoffs, shutdowns, departures, and key hirings]

Layoff activity sharply declined in October, with only two startups resorting to layoffs that impacted 110-120 employees during the month. In contrast, over 270 employees were laid off by four startups in September. Overall, around 4,600 employees were let go  in the first 10 months of 2024. Comparatively, this year’s layoffs are significantly lower than the 24,000 recorded in 2023 and the 20,000 in 2022.

Last month, SaaS firm Toplyn shut down its operations. The decision came as a surprise, given that the SaaS firm had raised funding from prominent investors like Peak XV and Tiger Global.

Meanwhile, the startup ecosystem saw significant departures of senior executives in October. Data shows that 16 top-level leaders, including CEOs, CBOs, CFOs, co-founders, managing directors, and presidents, stepped down. During the same period, 41 key executive positions were filled. The complete list can be accessed here.

[Trends]

Large early-stage deals: Despite a drop in overall funding, early-stage startups have secured significant deals. Notably, five seed and Series A stage startups collectively raised more than $165 million in funding in October. This includes two seed rounds of $20 million and $25.5 million.

Mumbai pips NCR: In a rare instance, Mumbai-based startups have surpassed Delhi in terms of number of deals, indicating that the city may compete with Delhi NCR in the coming years.

Edtech making comeback: After PhysicWallah's $210 million funding in September, Eruditus and upGrad raised $150 million and $60 million, respectively, in October. However, the trend indicates that only established unicorns have recently been able to secure large funding rounds

Reduced layoff activity: Layoff numbers decreased sharply, with only two startups laying off up to 120 employees, marking a positive trend compared to earlier in the year.

[Conclusion]

While the heady days of 2022 are not here yet, the fact is that the funding environment has improved immensely. The last bit of uncertainty, that is the US elections, will soon be behind us, to give a clear direction to the startup ecosystem. The Swiggy listing will likely improve sentiments further as a whole cohort of backers find exits and liquidity. It might soon be time for cities like Ahmedabad to make an impact as well, besides sectors like cleantech, where policy changes are aligning strongly for firms.