There has been a surprising drop in the valuation of multiple unicorns by private investors so far in FY23. Funding activity declined in both volume and deal sizes in May this year compared to the previous year. The investments in the venture side were dominated by B2B space, specifically enterprise software, AI/ML, climate tech, and EV. This trend is not new, data shows that the numbers still don’t compare well to previous years.  Why is this happening? That’s the big question and the start-up ecosystem in India is figuring out the reasons for these markdowns and their implications.

In the M&A activity, there is a trend of stronger hands taking over and consolidation in the market. Some notable deals include sovereign wealth funds acquiring equity from existing investors and private equity firms buying out companies from venture and growth equity funds. This indicates the maturing of the startup VC ecosystem. Several VC firms have closed new funds, and there is a disconnect between the money raised and the number of investments happening. This can be attributed to a timing issue, as investors take a long-term view and wait for the right opportunities. Additionally, the increased turnaround time for deals and the scrutiny of existing portfolio companies have also contributed to fewer investments. 

In this State of the Economy podcast, businessline’s Yatti Soni talks to Arun Natarajan, Founder, Venture Intelligence, and Siddharth Pai, Founding Partner at 3one4 Capital, to understand the impact of the new exemptions in angel tax provisions and how it has brought relief to foreign investors.  

Host: Yatti Soni, Producers: Anjana PV, Nabodita Ganguly)


About the State of the Economy podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups.