Venture capital funding for start-ups in India has plummeted by 71.5 per cent to $4.9 billion between January and August 2023, from $17.1 billion during the same period last year.

Deal volume fell by 42 per cent during the period. As many as 734 VC funding deals were announced, as against 1,266 in the same period last year, according to data intelligence firm GlobalData.

“Apart from several macroeconomic challenges and geopolitical conditions grappling global VC funding landscape and making a dent in investor sentiments, the Indian start-up ecosystem is grappling with rising investor caution regarding start-up valuations,” Aurojyoti Bose, Lead Analyst at GlobalData, said.

Subdued VC funding is now a global phenomenon, with most of the key markets experiencing decline in deals volume as well as value. 

India accounted for 5.3 per cent of the total number of VC funding deals announced globally during January-August 2023. Its share of the total disclosed funding value stood at 3.1 per cent.

Some of the key VC funding deals announced in India during January-August 2023 include $250 million fundraising by PhysicsWallah, $200 million by Zepto, $200 million by PhonePe, $146 million by Veritas Finance, and $120 million by KreditBee.

“In the evolving landscape of VC funding, adaptability and strategic valuation assessments are crucial for the sustainability of the Indian start-up ecosystem. While challenges persist, the resilience of these ventures, exemplified by notable funding deals, reaffirms the enduring potential of the Indian entrepreneurial spirit,” Bose said.

The findings echo Nasscom’s analysis of the funding landscape during the second quarter of the calendar year 2023 — VC funding stood at $1.31 billion, 76 per cent lower compared with the same quarter last year. It, however, showed an increase of 4 per cent quarter-on-quarter.