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Venture Capital Funding Sees Revival in Indian Startup Ecosystem

Updated: Apr 12, 2024 04:48:02pm

New Delhi, Apr 12 (KNN) After over a year of depressed investment activity, the Indian startup sector is witnessing green shoots of revival in venture capital and private equity funding.

Many of the larger funds that had stayed away from India are returning in a big way.

This incipient turnaround follows a prolonged funding crunch that gripped the ecosystem since late 2022, with last year being the worst for Indian startups in raising capital.

Major deals in recent months suggest deep-pocketed investors are regaining confidence.

Last month, reports emerged that e-commerce unicorn Meesho is in talks to raise around USD 300 million from investors like SoftBank, Tiger Global and others, reported BL.

This development sent ripples across the startup space, as it would mark SoftBank's potential re-entry after an 18-month hiatus - viewed as a significant positive signal.

The revival is backed by data as well. In the first quarter of 2024, venture capital investments in Indian startups crossed USD 2 billion from 183 deals, nearly double the amount raised in the previous quarter, according to Venture Intelligence.

While still lower than the preceding year, the improving quality of investors and increasing ticket sizes are seen as positive indicators by analysts.

Some of the major deals in the March quarter include enterprise software firm Kore.ai raising USD 150 million, mobile app Pocket FM securing USD 103 million, and beer maker Bira raising USD 50 million.

Influential Indian family offices are also deploying capital, with media reports suggesting Azim Premji's Premji Invest is looking to invest USD 50-70 million in graphic design tool startup Canva after co-leading a USD 53 million round in Hippocratic AI.

While 2023 was the worst year for Indian startups in over a decade with total funding of just over USD 7 billion compared to USD 25 billion in 2022, the recent thawing of the funding winter could catalyse broader investment revival if large ticket-size deals continue.

This would provide much-needed relief to the startup ecosystem after a prolonged lean period.

(KNN Bureau)


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