Indian Startup Funding Doubles YoY To $3.4 Bn In Q3 2024

After a drought of almost two years, the Indian startup ecosystem is showing signs of the arrival of funding spring. The total funding raised by homegrown startups doubled year-on-year (YoY) to $3.4 Bn in the third quarter (Q3) of calendar year 2024 (CY24).

Indian startups had raised approximately $1.7 Bn in the corresponding period last year and nearly $3 Bn in Q3 CY22.

The overall deal count jumped to 262 in the September quarter of 2024, up almost 28% from  205 deals that materialised in Q3 2023. 

According to Inc42’s ‘Indian Tech Startup Funding Report, Q3 2024’, the median cheque size of the deals zoomed 142% to $2.9 Mn in Q3 2024 from $1.2 Mn in the year-ago period, reflecting growing investor confidence in the Indian startup ecosystem.

The funding raised by Indian startups during the quarter under review was 10% higher than $3.1 Bn in Q2 2024 and 55% more compared to $2.2 Bn in Q1 2024.

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However, merger and acquisitions fell 33% year-on-year to 18 in Q3 CY24.

Mega Deals Make A Strong Comeback

After a prolonged funding winter, the number of mega deals — funding rounds of over $100 Mn — surged to 10 in the September quarter of 2024 from three in Q3 2023 and four in Q3 2022.

The number of mega deals stood at four and three in the June and March quarter of 2024, respectively. 

Startups like Zepto, PhysicsWallah and Rapido led the way when it came to mega deals in Q3 2024.

Amid the quick commerce boom, Zepto raised its second mega round this year in August, bagging $340 Mn from marquee investors such as Lightspeed Venture Partners, General Catalyst and Dragon Fund, among others. The funding round came just two months after the startup raised $665 Mn at a valuation of $1.4 Bn.

At a time when edtech startups are facing a tough funding environment following the troubles of BYJU’S, Alakh Pandey-led PhysicsWallah raised $210 Mn in the September quarter in a round led by Hornbill Capital. 

Last month, ride-hailing major Rapido turned unicorn after raising $200 Mn in its Series E funding round led by WestBridge Capital.

Other notable mega deals during the quarter included the funding rounds of hospitality major OYO and electric two-wheeler maker Ather Energy, which has filed draft papers with market regulator SEBI for its INR 3,100 Cr initial public offering (IPO).

Besides Rapido, Ather Energy and Moneyview joined the unicorn club in the September quarter. The world’s third biggest startup ecosystem has already minted six unicorns in the first nine months of 2024 as compared to just two unicorns in the entire 2023.

Overall, the funding raised by India startups inched closer to the $9 Bn mark in the first nine months of 2024. Since the beginning of this year, Indian startups have cumulatively raised $8.7 Bn compared to $7.2 Bn raised in the entire 2023.

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Seed, Growth, Late Stage Investments Rebound

In line with the overall funding trends, startups across stages saw a rise in the capital raised in the September quarter.

Seed-stage startups mopped up funds worth $360 Mn in Q3 2024, a jump of a whopping 126%  from $159 Mn in the year-ago period. However, deal count fell 3% YoY to 125 across seed stage. Nutrix AI’s $27.5 Mn funding round and Centricity’s $20 Mn funding round were among the biggest seed stage deals during the quarter under review.

Growth-stage startups secured a funding of $847 Mn in Q3 2024, up 91% from $443 Mn in the year-ago quarter. Investors made 65 bets on growth-stage startups in the reported quarter, a 103% jump from 32 in Q3 CY23. Notable deals included Everest Fleet’s $30 Mn funding round and Redcliffe Labs’ $42 Mn. 

Meanwhile, late-stage investments surged 115% to surpass the $2.1 Bn mark during the quarter under review from $984 Mn in Q3 CY23, thanks in part to OYO’s $175 Mn from a clutch of investors, including Patient Capital, J&A Partners, InCred Wealth, among others. Late-stage startups were involved in 40 funding rounds in the September quarter in 2024, up 135% from 17 in the year-ago period.

Fintech Remains Investors’ Darling

The fintech sector continued to get maximum interest from investors, with fintech startups bagging $677 Mn across 45 deals in Q3 2024. The September quarter saw several notable funding rounds within the Indian fintech space. For instance, fintech SaaS startup M2P Fintech bagged $101 Mn in its Series D funding round from investors like Helios Investment Partners and Flourish Venture.

Enterprise tech remained the second-most funded sector, with startups in the space raising a combined $549 Mn across 52 deals in Q3. The enterprise tech sector received a shot in the arm last month when B2B SaaS startup Whatfix raised $125 Mn as part of its Series E funding round with participation from Warburg Pincus and SoftBank.

In a reversal of trends sectorally, the September quarter saw consumer services lose its title as the third-most funded sector to the ecommerce sector. Ecommerce startups mopped up funds worth $482 Mn during the period across 57 deals. The major funding rounds in the sector, including Purplle’s $120 Mn funding and BlueStone’s $107 Mn round. 

Bengaluru Retains Top Spot

While Bengaluru retained its title as India’s startup hub, Delhi NCR overtook Mumbai to emerge as the second-highest funded startup hub.

Startups headquartered in India’s Silicon Valley raised $1.1 Bn across 81 deals in Q3 CY24. Bengaluru was followed by Delhi NCR, with startups based in the national capital region raising $876 Mn across 59 deals. At the third spot was the country’s financial capital, with Mumbai-based startups bagging $871 Mn across 47 deals during the period.

Chennai retained the fourth spot in Q3 CY24, with startups based out of the city securing funding of $189 Mn across nine deals. By comparison, investors made 8 bets on Hyderabad-based startups during the quarter under review, worth $50 Mn.

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