SUMMARY
On a month-on-month basis, funding fell 31% from $1.3 Bn in March 2023, while funding deals dipped 13% to 61 in April 2023 from 70
Fintech continued to be the favourite sector of investors, as two-thirds of the total funding amount raised in April 2023 was bagged by the startups in the sector
DMI Finance’s mega round saw Delhi NCR jumping to the top spot among India’s startup hubs in terms of funding amount
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The funding winter continued to strangle the Indian startup ecosystem in April 2023, as the funding raised by startups in the first month of the financial year 2023-24 (FY24) declined 66% year-on-year (YoY) to $888.45 Mn.
On similar lines, the number of funding deals plummeted 60% YoY to 61 last month, according to Inc42 data.
On a month-on-month (MoM) basis, funding fell 31% in April 2023 from $1.3 Bn in March 2023, while funding deals dipped 13% from 70.
While the funding raised by Indian startups declined 75% YoY to $3 Bn in the January-March quarter of 2023, the last month of FY23 was the best one for startups in terms of funding. Indian startups raised $1.3 Bn in March 2023, the highest since November 2022.
However, with April, five of the last 12 months saw startup funding drop below the $1 Bn mark, reflecting the prevalent chill.
Fintech continued to be the favourite sector of investors, as two-thirds of the total funding amount raised in April 2023 was bagged by the startups in the sector. However, it must be noted that DMI Finance’s $400 Mn funding round accounted for 65% of the total funding raised by fintech startups in April.
Enterprisetech and consumer services were the other leading sectors which raised funding last month.
However, enterprisetech took the top position in terms of deal count in April 2023. While enterprisetech startups saw 15 funding deals during the month, fintech and ecommerce sectors saw 10 and eight funding deals, respectively.
As a result of DMI Finance’s mega round, Delhi NCR-based startups cumulatively raised $498 Mn in April. The region jumped to the top spot among India’s startup hubs in terms of funding raised. Bengaluru fell to the second spot, with startups in the city raising $247 Mn, while Mumbai recaptured the third spot for the first time since January. Startups in India’s financial capital raised a total funding of $113 Mn last month.
Surat was a new entrant to India’s top startup hubs list, courtesy of Zero Cow Factory and Video SDK together raising funding of $5.2 Mn in April.
Even as Delhi NCR came out on top in terms of funding amount, Bengaluru retained the top spot in terms of funding deals. The capital city of poll-bound Karnataka saw 21 funding deals in April 2023, while Delhi NCR and Mumbai completed the podium with 15 and 10 deals, respectively.
Meanwhile, a stage-wise analysis of funding trends of the month showed a steep decline across the board amid the ongoing funding winter.
While seed funding declined 68% to $46 Mn last month from $145 Mn in April 2022, bridge funding fell 53% to $22 Mn in April 2023 from $46 Mn a year ago.
Late stage funding plunged the highest at 85% as late stage startups could only raise $234 Mn last month as against $1.6 Bn in April 2022. On the other hand, growth stage funding saw the lowest fall, declining to $586 Mn last month from $843 Mn in the year-ago month.
As the funding winter continues to bite, Indian startups have been forced to look for ways to cut costs and push for profitability. This has resulted in thousands of layoffs.
As per Inc42’s ‘Layoff Tracker’, 92 Indian startups, including several unicorns and soonicorns, have fired over 25,000 employees since 2022 in a bid to increase their runway and attain profitability.
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