SUMMARY
For FY24, 26% of investors were bullish about enterprisetech and fintech each, according to the Inc42 survey
Both fintech and enterprisetech look set to continue the funding momentum gained during 2022
Healthtech was third on the list of investor favourite sectors for FY24, as 14% of investors were bullish about it
Of all the sectors Indian startups have a presence in, enterprisetech and fintech look likely to be investor favourite sectors going into the financial year 2023-24 (FY24).
According to a survey conducted by Inc42 with 50+ active investors in Indian startups, 26% of investors were bullish about enterprisetech and fintech each for FY24. Therefore, more than half of the investors were only bullish for two sectors for the next fiscal year.
Interestingly, healthtech was third on the list of investor favourite sectors for FY24, as 14% of all investors who responded were bullish about it. Ecommerce and deeptech attracted the interest of 7% of the investors each. The remaining 21% of the investors were bullish about other startup sectors in the country.
Surprisingly, even though ecommerce was the second-largest sector in terms of funding raised in 2022 ($4.2 Bn raised as of December 30, 2022, per Inc42 data), investor confidence in the sector has seemingly been shaken.
While reports from industry players suggest an increase in the number of online shoppers during FY24, investors’ concerns remain about unit economics and the high cash burn at ecommerce startups.
Both fintech and enterprisetech look set to continue the funding momentum gained during 2022 in the next financial year.
Incidentally, fintech has remained the top sector in terms of investment attracted. As of December 30, 2022, fintech startups have raised $4.5 Bn in 2022, with enterprisetech startups raising $3.8 Bn, according to Inc42 data.
Deeptech, on the other hand, looks set to remain a mid-table sector in terms of funding raised. In 2022, Indian deeptech startups have raised $1.5 Bn, being the sixth favourite of investors during the year.
The investor confidence trends come as more than two-thirds of them said that the startup funding winter that plagued the majority of FY23 might continue in FY24. Even as investors anticipate a reduction in LP capital inflow for venture capital (VC) firms, about 80% intend to increase the number of investments in FY24.
The intent to invest more often implies that while the number of startup deals might rise, the average ticket size might decline. Further, investment in early to growth stage startups might also increase as funding in late stage startups continues to decline.
