New Delhi, Dec 1 (KNN) Venture capital (VC) funding to Indian startups hit a six-year low in November, according to a report by Venture Intelligence.

As per the report, the Indian startups recorded only USD 223 million in 35 deals in November, a fall of about 66 percent fr0m USD 655 million in 52 deals in the previous month, reported Moneycontrol citing data shared by Venture Intelligence.

Mitesh Shah, founder of VC firm IPV, told Moneycontrol that November and December generally receive lower funding with the year coming to an end and the festive season. VCs are not doing newer rounds and mostly looking at closing pending ones. This along with caution among investors is pulling the numbers down.

While investors are open to evaluating startups, Shah added that investors had become more selective and were not running after numbers.

The month also recorded a massive year-on-year decline of 78.2 percent fr0m USD 1.02 billion in 62 deals in November of 2022. The decline in VC funding has impacted the overall funding for 2023. Indian startups recorded about USD 7.05 billion in funding till November, down 71 percent fr0m USD 24.36 billion in 2022.

Venture capital firms also slowed down on closing rounds with the number of deals down to half at 544 in the first 11 months of 2023 fr0m over 1,226 in the whole of 2022.

This comes at a time when investors have shifted focus fr0m high-growth ventures to profitable startups, prolonging the funding winter.

According to the reported numbers in FY23, companies including upGrad, Eruditus, Practo, LEAD, and Moglix, trimmed their losses. These developments, however, are yet to make an impact on the late-stage funding rounds.

Late-stage funding rounds again disappeared fr0m the ecosystem in the last two months, following a noticeable resurgence in August and September.

In 2023, startups recorded only 45 deals with a total funding of USD 1.9 billion, down fr0m 77 deals with a funding of USD 6.8 billion in the previous year.

While early-stage rounds have also been few and far, recording only USD 1.14 billion in funding in 316 deals, the top deals in November ranged only fr0m seed to series B, indicating greenshoots for early-stage funding.

Investors, however, expect better deal flow in 2024 and a comeback for late-stage deals in the latter half of the year.

“I believe the numbers are trailing the actual sentiment. There is a lot more positivity and excitement going into the final calendar month of 2023,” Anirudh Damani, Managing Partner, Artha Venture Fund told Moneycontrol.

With equity markets at record highs, Damani said, the recovery in the private markets was around the corner.

“I expect a fantastic year for investing in 2024, both for investors and founders. The funnel has restarted, the move up the funnell will be later next year. So, I expect a flurry of activity in the next two quarters, especially post the 2024 elections,” Damani said.

(KNN Bureau)