Indian startups faced a harsh funding winter in 2023, resulting in the value of venture capital (VC) deals falling by more than half year-on-year (YoY), GlobalData, a London-based data and analytics company, said.
 
The total number of VC funding deals concluded last year reached 1,085, marking a 37.9% decrease from the 1,748 deals in 2022. The deal value also experienced a substantial YoY drop of 63%, reaching $7.8 billion in 2023.

“The funding winter, which started in the last quarter of 2021, continued to prevail thereafter but was much harsher for 2023," said Aurojyoti Bose, Lead Analyst at GlobalData.
 
Apart from several factors such as macroeconomic challenges, ongoing conflicts, and geopolitical tensions, concerns around startup valuations also had a major dent in investor sentiments for India, he said.
 
“Nevertheless, there are some bright spots as well, and the environment is not so gloomy for startups with a clear roadmap and strong fundamentals. Funding secured by some of the startups despite challenging conditions is indicative of this.”
 
Some of the prominent VC funding deals announced included $340 million worth of funding raised by Udaan, $229 million by Perfios Software Solutions, $200 million by PhonePe, and $200 million by Zepto, among others.
 
India continues to be a key Asia-Pacific (APAC) market for VC funding activity, standing just next to China, Bose added.
 
India accounted for a 5.6% share of the total number of VC deals announced globally in 2023, while deal value stood at 3.3% of the total, GlobalData said.

(Editing by Seban Scaria seban.scaria@lseg.com)