Funding winter turns harsher; global startup hubs hit by poor VC fund flow

K V Kurmanath Updated - January 21, 2024 at 10:04 AM.

The adverse impact of the much-talked-about funding winter continues to hit startups across the global hubs. While venture capital funding plummeted by 63 per cent to $7.8 billion, it fell by about 47 per cent to $109.4 billion in the United States and by 27.4 per cent in China to $42.6 billion in 2023.

“Venture capital funding in 2023 failed to touch the $10-billion mark, a level that was reached in just the first four months of 2022,” Aurojyoti Bose, Lead Analyst at GlobalData, said.

“The funding winter, which started in the last quarter of 2021, continued to prevail thereafter but was much harsher for 2023,” he said.

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.

However, despite the setback, India continued to be among the top-five markets globally. 

Startups with strong fundamentals and a clear roadmap continued to secure funding. India accounted for a 5.6 per cent share of the total number of VC deals announced globally during 2023, while its share of the corresponding deal value stood at 3.3 per cent.

A total of 1,085 VC funding deals worth $7.8 billion were announced in India in 2023. This represents a decline of 37.9 per cent in terms of VC funding deals volume compared to the announcement of 1,748 deals during 2022.

“The decline in terms of value stood significantly high at 63 per cent compared to $21.2 billion worth of VC funding deals announced during 2022,” according to GlobalData, a data and analytics company.

China suffers 27% fall in funding

China also remains a key global market for VC funding standing just next to the US. The Chinese startups clinched four of the ten billion-dollar deals announced globally. 

A total of 3,220 VC funding deals with a disclosed value of $42.6 billion were announced in China in 2023, showing a decline of 16.6 per cent in terms of volume and 27.4 in terms of value compared to 2022.

VC deals in US hit

The total VC funding deal value for the US took a prolonged 11 months to reach the $100-billion mark during the year. A total of 6,596 VC funding deals with a disclosed funding value of $109.4 billion were announced in the US during 2023. This represents a decline of 43.5 per cent in terms of VC deal volume and 45.6 per cent in terms of deal value compared to 2022.

Published on January 21, 2024 04:34

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