Indian Startup Ecosystem Shows Signs of Recovery: H1 2024 Funding Report
Introduction:
The Indian startup ecosystem is exhibiting promising signs of recovery in the first half of 2024. This period has witnessed larger funding rounds, an increase in the number of deals, a surge in secondary deals and ESOP buybacks, and a decline in layoffs. This comprehensive report delves into the funding trends, key deals, and significant developments that shaped the startup landscape in H1 2024.
Funding Overview: A Positive Trajectory
According to data compiled by TheKredible, Indian startups raised nearly $7 billion in funding during the first half of 2024. This marks a notable improvement from the $5.92 billion raised in H1 2023, although it falls short of the $20 billion raised in H1 2022, which now appears to have been a golden phase for startups in terms of venture capital inflow.
The $7 billion funding in H1 2024 comprised:
– 182 growth or late-stage deals worth $5.4 billion
– 404 early-stage deals worth $1.54 billion
– 99 undisclosed deals
This period also saw the emergence of two new unicorns: Perfios and Krutrim SI Designs. This is an improvement from 2023, which produced only two unicorns, but still lags behind the 26 and 44 unicorns that emerged in 2022 and 2021, respectively.
Month-on-Month Trends
The funding trajectory showed a significant upswing towards the end of H1 2024. June saw nearly $2 billion in funding, more than double the average monthly funding of $1 billion observed until May this year.
Top Funding Rounds: Growth and Early Stage
Growth Stage Deals
Late-stage companies dominated the top funding charts in H1 2024:
- Zepto: $665 million
- Flipkart: $350 million
- PharmEasy: $216 million
- Lenskart: $200 million (pure secondary transaction)
Other notable rounds included Engrail, Atlan, Pocket FM, Nephroplus, SEDEMAC, and Shadowfax, all raising over $100 million each.
Early Stage Deals
The early-stage funding landscape was equally vibrant:
- SCOPE (networking platform): $90 million
- Krutrim (AI startup)
- Avail (blockchain startup)
- Indkal (e-commerce startup)
- IBC (battery tech startup)
Over 30 early-stage startups raised more than $10 million each during this period.
Mergers and Acquisitions: A Changing Landscape
H1 2024 witnessed 55 mergers and acquisitions, a decline compared to previous years. Notable stress deals included:
– ZestMoney’s acquisition by DMI Group
– MX Player’s acquisition by Amazon
– Kuvera’s acquisition by CRED
– Spartan Poker’s acquisition by OneVerse
– ET Money’s acquisition by 360 One (formerly IIFL Wealth)
Geographical and Sector-wise Analysis
City-wise Funding Distribution
- Bengaluru: 253 startups, $2.83 billion (40% of total funding)
- Delhi-NCR: 164 deals, $1.3 billion (18.76% of total funding)
- Mumbai: 22% of total funding
- Hyderabad and Pune rounded out the top five
Sector-wise Funding
- E-commerce: 124 startups, $1.87 billion
- Fintech
- Healthtech
- SaaS
- EV (raised more than SaaS and healthtech)
Agritech, foodtech, edtech, and proptech sectors saw a decline in funding during this period.
Stage-wise Funding Analysis
– Seed and pre-seed: 266 deals, $457 million
– Series A and pre-Series A: 134 and 80 deals respectively
– Debt funding: 58 deals, $784 million
– Pre-IPO rounds: 5 deals, nearly $250 million
Layoffs, Shutdowns, and Departures: A Declining Trend
While layoffs, shutdowns, and departures continued in 2024, there was a sharp decline compared to previous years:
– Layoffs: 3,300 people (compared to over 9,000 in H2 2023 and 15,000 in H1 2023)
– Shutdowns: 6 companies (including Resso, Rario, OKX India, GoldPe, and Muvin)
– High-profile departures: 45 top-level executives left their posts
Emerging Trends in H1 2024
Surge in Generative AI and Spiritual Tech
– AI startups: 27 deals, $237 million
– Generative AI startups: Nearly $100 million (including Sarvam AI, Ema, Neysa, Vodex, KonProz)
– Spiritual tech startups: Over $36 million
Maiden Funding for Established Fashion Brands
Several fashion and apparel brands raised their first institutional rounds:
– TechnoSport: $21 million led by A91 Partners
– Libas: $18 million led by ICICI Venture’s fund
– Rare Rabbit: $18 million led by A91 Partners (expected to close at around $50 million)
ESOP and Secondary Deals
– Over 10 startups announced ESOP buyback programs worth nearly $58 million
– Significant secondary transactions benefited companies like Lenskart, Meesho, Shadowfax, Fibe, Wow! Momo, and Porter
Rise in Startup IPOs
– Listed in 2024: TBO tech, Digit Insurance, Awfis, Ixigo
– Awaiting approval: Mobikwik, Swiggy, Avanse
– Potential upcoming IPOs: Zepto, Flipkart, PharmEasy, The Good Glamm Group
Increase in Debt Deals
– 57 debt-only deals amounting to $784 million
– Total debt funding potentially exceeding $1 billion when including mixed equity-debt deals
Conclusion: A Cautiously Optimistic Outlook
While the funding levels of H1 2022 may take time to reach again, the Indian startup ecosystem is showing clear signs of recovery. The stability in government and booming stock markets are likely to drive further funding for startups. The real challenge lies in backing innovative ideas and seeding the next crop of startups that will shape India’s technological future.
FAQs
Q1: How much funding did Indian startups raise in H1 2024?
A1: Indian startups raised nearly $7 billion in funding during the first half of 2024.
Q2: How does the H1 2024 funding compare to previous years?
A2: The $7 billion raised in H1 2024 is more than the $5.92 billion raised in H1 2023, but less than the $20 billion raised in H1 2022.
Q3: Which cities received the most funding in H1 2024?
A3: Bengaluru led with 40% of total funding, followed by Delhi-NCR and Mumbai.
Q4: Which sectors attracted the most funding?
A4: E-commerce led with $1.87 billion, followed by fintech, healthtech, SaaS, and EV startups.
Q5: How many new unicorns emerged in H1 2024?
A5: Two new unicorns emerged: Perfios and Krutrim SI Designs.
Q6: What were the largest funding rounds in H1 2024?
A6: The largest rounds were Zepto ($665 million), Flipkart ($350 million), PharmEasy ($216 million), and Lenskart ($200 million).
Q7: How many mergers and acquisitions occurred in H1 2024?
A7: There were 55 mergers and acquisitions during this period.
Q8: What new trends emerged in the startup ecosystem?
A8: Key trends included a surge in generative AI and spiritual tech funding, maiden funding for established fashion brands, increased ESOP buybacks and secondary deals, and a rise in startup IPOs.
Q9: How did the layoff scenario change in H1 2024?
A9: Layoffs declined significantly, with 3,300 people laid off compared to over 9,000 in H2 2023 and 15,000 in H1 2023.
Q10: What is the outlook for Indian startups in the near future?
A10: The outlook is cautiously optimistic, with signs of recovery and potential for growth, especially with the booming stock markets and increased investor interest in startup funding.
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