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Funding for Indian startups is back*

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Nikhil Patwardhan

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Nikhil Patwardhan

31 reads

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April 10, 2024

11 MINS READ

Key Takeaways

  • In March, India’s startup ecosystem saw 11 deals in the range of $20-50 million, two between $50-100 million, and three exceeding $100 million
  • While big-ticket deals seem to have made a comeback, the exuberance of the pandemic era remains miles away 
  • Moreover, a significant portion of the funding is going towards secondaries, and investors seem to be backing only financially robust companies
  • Importantly, investors remain cautious about the actual monetisable internet market in the country and are offering significantly lower revenue multiples than in 2021

Last month’s news that Tiger Global and SoftBank were considering investing in e-commerce platform Meesho was something of a watershed moment. The two investors, renowned for backing many of the country’s biggest startup successes, had refrained from investing in India for over 18 months. For beleaguered startups that had endured two years of a gruelling funding winter, it signalled that, perhaps, the worst was now behind them.

Indeed, following these reports, the subsequent week saw a flurry of funding announcements, particularly for late-stage companies. From Purplle and HealthKart to Zepto and even Sachin Bansal's bootstrapped fintech Navi, the late-stage market suddenly appeared to be bustling with activity. "We are so back," exclaimed a venture capital investor who spoke to The CapTable around this time.

Despite the seeming exuberance, startup funding remained subdued in the first quarter of 2024. PrivateCircle Research data revealed that deal volume in the current year's first quarter halved to 345 from over 700 in the same period of 2023. However, the average deal size more than doubled to Rs 53 crore from approximately Rs 21 crore. Overall funding, therefore, grew by 20% in the January-March period despite the year-on-year drop in deal numbers.

March alone witnessed 11 deals ranging from $20-50 million, two between $50-100 million, and three exceeding $100 million, as per PrivateCircle Research data. Undoubtedly, momentum in the startup deal landscape appears to be growing.

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