Mega Funding Deals Stagnate YoY Even As Late Stage Funding Surge 25% To $7 Bn+

Just when the green shoots of revival in yearly funding started to get visible, we noted that mega funding trends ($100 Mn and above) had hit stagnation in the world’s third-largest startup ecosystem. 

This is probably the reason why despite a 20% YoY rise in yearly startup funding to over $12 Bn, the metric was seen locked at 2020 levels when Indian startups had raised a similar amount across 950+ deals.

According to Inc42’s Annual Funding Report 2024, the Indian startup ecosystem managed just 24 mega deals, which were on par with the 23 deals recorded during the year of the extended funding winter (2023). These mega deals accounted for 38% ($4.6 Bn) of the total funding raised by Indian startups in 2024.

Notably, quick commerce major Zepto raised multiple mega deals this year, bagging a total funding of over $1.3 Bn in three tranches. After raising $665 Mn in June, the quick commerce giant raised $340 Mn in August and an additional $350 Mn in November.

Upon removing Zepto from the equation, mega funding trends of this year closely resemble 2017 levels when 21 mega deals took the total funding raised by Indian startups to 13 Bn+.  

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However, the number of mega deals that took place in the entirety of 2024 is a far cry from the 109 deals raised in 2021 and 60 in 2022.  

What’s concerning, however, is that the stagnation in mega deals occurred despite the launch of over $8.7 Bn in 81 fresh funds this year. In contrast, 64 funds worth $5.6 Bn+ were launched last year. 

Commenting on this, 3one4Capital’s founder Pranav Pai said that investors remained cautious during the year, which made them steer more towards early-stage bets.

Now, what we need to understand is that in spite of a 7% YoY decline in the total number of early deals to 433 deals, the amount of early-stage infusion increased 31% YoY to $893 Mn+ on the back of a 22% rise in the median ticket size in this stage. A similar trend was observed in the growth stage where startups raised $3.5 Bn across 282 deals versus $2.9 Bn raised across 192 deals in the preceding year.

 

Why Did Investors Refrain From Signing Cheques Worth $100 Mn And Above? 

The major deterrent, as per industry experts, has been the inflated valuations of many startups. Many say that founders expect unrealistic valuations at bigger rounds, which now does not bode well for many.

This also paved the way for a new trend, which was raising funds, including mega rounds,  at steep valuation cuts. Interestingly, the year was filled to the brim with such instances.

In the case of mega funding with a steep valuation haircut, e-pharmacy unicorn Pharmeasy raised $216.2 Mn in a funding round led by the family office of Manipal Group chairman Ranjan Pai at a hefty 90% valuation cut from its peak valuation of $5.6 Bn in October 2021. 

Similarly, Oyo took a down round of $175 Mn in August at a 76% valuation cut from its peak of $10 Bn in 2019. Besides, names like BYJU’S, Groww, Postman, and Meesho, among others, came under the valuation restructuring guillotine on the books of their respective investors. 

Imperative to mention that many startups also trimmed their lofty valuations before making their public market debut. Some of the top examples are Swiggy, Ola Electric, MobiKwik, and BlackBuck.

“Valuations of companies fell almost 25% on average in the growth and late stages from the highs of 2021-2022. This led to growth in funding activity in secondaries that is seen even today,” Anup Jain, the founding partner of BlueGreen Ventures said. 

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Late Stage Steals The Show 

Despite a stagnation in mega deals, startups at late stages saw a heightened investor interest during the year. Late-stage funding zoomed 25% to over $7 Bn across 150 deals this year. Besides, the number of late-stage deals went up by more than 81% YoY. 

Besides, as many as six startups, including listed SaaS company Rategain, entered the unicorn club this year. What’s interesting is that four out of the five unlisted startups, excluding Krutrim, lapped up unicorn valuations sans mega deals. 

While Rapido became a unicorn in September by netting $200 Mn, Perfios, Moneyview and Ather clinched the coveted tag by raising $80 Mn, $4.6 Mn, and $71 Mn, respectively    

The year also saw many startups embrace the public markets. In total, thirteen startups, including Swiggy, Awfis, MobiKwik, and Unicommerce, made their public market debut this year. 

A bigger wave of startup IPOs is anticipated next year. While Ather, IndiQube, and DevX have filed their DRHPs, Ecom Express, ArisInfra, and Smartworks, have received the market regulator’s go-ahead for their public listing bid. 

In total, the SEBI has approved IPOs of 34 companies worth INR 41,462 Cr. 

Meanwhile, as many as 55 firms await SEBI’s nod to lint on Indian bourses. With this, VC firm Pantomath Capital projects equity raised via IPOs to cross the INR 2 Lakh Cr mark by next year. Besides, investors anticipate the IPO boom to make way for large private rounds, or even mega funding rounds, as we step into 2025. 

[Edited By Shishir Parasher]

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