Indian Startups Saw a 17% Rise in USD 100 Mn+ Funding Rounds in H1 2023 Companies like BYJU'S, Lenskart, Phonepe, Ola Electric are some of the top names that have managed to raise funds above USD 100 million in this quarter.
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According to Tracxn data, there were 14 investment rounds totaling $100 million or more in the first half of 2023, an increase of 17% from the 12 in the second half of 2022. Some of the top names in startups that have succeeded in raising capital above USD 100 million in this quarter are BYJU'S, Lenskart, Phonepe, and Ola Electric.
In Q1 2023, BYJU'S, a platform that offers students multidisciplinary learning solutions, raised a total of USD 700 million in several Series G rounds, valuing the firm at USD 5.1 billion. A wallet-based payment app called PhonePe raised USD 650 million in total in multiple Series D rounds in Q1 2023, valuing the business at USD 12 billion. A wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) led a Series J round of funding for Lenskart, an online eyewear retailer, raising USD 600 million at a valuation of USD 4.5 billion.
This happens at a time when investors, especially in late-stage rounds, are less reckless when betting on entrepreneurs. Even VCs admitted that getting investment after Series A has been challenging and will remain challenging for a time.
The funding for late-stage rounds, according to Tracxn statistics, was USD 3.8 billion in the first half of 2023, dropping 71% from the first half of 2022 and 11% from the second half of 2022. The leading late-stage investors were Filter Capital, ASVF, and Avataar Ventures.
"Since 2021 – the year that was exceptionally good for Indian startups looking to raise funds -- things have become quite challenging. However, these changes in the market scenario do not imply that funding is getting tougher, but just that the approach of investors has changed. There is still ample funding opportunity for the meaningful startup especially those early stages. While every investor understands that it is nearly impossible for a startup to become profitable in the first or second year, they need a clear roadmap to profitability as they evolve. Founders who display sound understanding of finance management and efficiency of handling cash and human resources, will find it easier to convince investors," according to Ankit Kedia, Founder and Lead Investor, Capital A.
"However, this was important in terms of pressing the reset button of meaningful investments. The fact that we are at the half-year mark, but no new unicorn has been added to the ecosystem, is a clear indicator of which stages are likely to experience a prolonged winter," he said.
The G20 Sherpa from India, Amitabh Kant, held the opinion that there is no financial winter in the startup industry. He claimed that there are many dollars circulating around the globe looking for well-organized, worthwhile projects.
Kedia too believed that the funding outlook is quite positive for the year ahead, and we must look at things in the right perspective. "First, there is no doubt that the frequency of funding deals will increase later in the year as VCs need to make meaningful investments and ensure growth for their investors and partners. Second, a greater focus on due diligence, unit economics, and profitability of startups will continue to prevail. Thus, we can see a lot of new startups succeeding across operational domains such as fintech, wealth-tech, sustainable businesses, and climate tech segments like EVs and clean mobility etc," he stated.
