NEW DELHI: The startup funding in India registered a decline of 17 per cent in FY 24 as compared to the previous year. In 2021 the investment professionals were getting on average six deals daily but in 2024, it has declined to three.
According to a report titled ‘India Invests’ by Wealth 360 One, the private equity of value USD 100-250 million range, is down by 60 per cent. While those investing USD 500 million or more too have gone down drastically by over 80 per cent. The funds investing less than USD 100 million have also registered a decline of 30 per cent. But funding under USD 5 million is still happening at a steady rate.
The report highlights that the bigger deals, over USD 25 million, which usually happen when a startup is growing, have also decreased. This means there’s less money going into startups overall, especially in the medium to large-sized deals. Late-stage venture capital investments have been hit hard too.
Startups raised nearly USD 8 billion from investors this year, marking a 50% decrease from FY 22-23.
As per the Ministry of Commerce and Industry data, India is home to 111 unicorns with a total valuation of USD 349.67 billion. Out of the total number of unicorns, 45 unicorns with a total valuation of USD 102.30 billion were born in 2021 and 22 unicorns with a total valuation of USD 29.20 billion born in 2022. In 2023 only one unicorn emerged.
India houses 1.7 lakh registered Startups, collectively generating over 1.2 million jobs. Maharashtra leads with 5801 Startups, followed by Delhi NCR with 3150, Karnataka with 3032, and Tamil Nadu with 2810 Startups.
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This slowdown in funding isn’t just in one area of investment. Both private investment and venture capital funding have taken a hit, especially after the surge seen in 2021-2022 during the pandemic.
Angel investors, who usually support startups in the early stages, are putting more money in, but they’re choosing fewer startups to back. On the other hand, venture capital deals have also dropped by half in FY24 from the previous year.
According to the report, consumer-focused sectors and technology are facing the most caution from investors. These sectors are experiencing a big drop in the number of deals and the total amount of money. But the industrial and materials sectors are staying steady, while others like financial services and healthcare are doing better.
Investors, especially in the tech sector have declined. They want to see profits and realistic values before investing. This caution has led to almost half the amount of money being invested in the tech sector compared to before. Similar decreases are seen in consumer staples and discretionary companies as investors look for safer bets.
Maharashtra, Karnataka, Haryana, Delhi, and Tamil Nadu are the top five states to attract substantial investments by private equity funds. In terms of cities, Mumbai, Delhi NCR, Bengaluru, Chennai, and Pune are the top cities that attracted maximum PE investments.
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However, the investments in FY24 is up to 30 per cent less as compared to FY23 in most of the states. The experts have attributed the decline to the reduced investment in Indian Startups. Mumbai has surpassed India’s silicon city Bengaluru in attracting PE funds as Startup funding has substantially lowered in FY24.
