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Indian startups raise $1 Bn in July: Report

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After closing the first half year on a promising note, Indian startups managed to cross the $1 billion monthly funding run rate in July too. Startups are also anticipating favorable market conditions with many set for their stock market debut in early August, be it Ola Electric or Infra.Market later in the year. Meanwhile, the Indian government has abolished angel tax which is seen as a positive for the entire ecosystem. As per data compiled by TheKredible, Indian startups raised over $1.03 billion across 126 deals in July. This consisted of 28 growth stage deals amounting to $725 million and 72 early stage deals worth $311.83 million. Meanwhile, there were 26 undisclosed transactions mainly in early-stage deals. [Y-o-Y and M-o-M trend] While the last month saw a sharp decline in funding from $1.93 billion in June, this is the highest funding for July in the past three years. The sudden jump in June was steered by Zepto’s $665 million megaround followed by Flipkart, PharmEasy and Lenskart. Indian startups have raked in $8 billion in the first seven months of 2024. If the trend continues, the overall funding is comfortably expected to cross the $11 billion milestone of 2023. To recall, Indian startups saw $38 billion and $25 billion funding in 2021 and 2022, respectively. [Top 10 growth stage deals] There were two $100 million plus deals in July with Purplle and Rapido raising $120 million each. Bike taxi firm Rapido also turned unicorn and became the third company to enter the billion dollar valuation club in 2024 so far. Hospitality firm Oyo’s $50 million came in third position followed by home service marketplace Urban Company, fintech company Navi, electric vehicle firm Matter, and wealthtech startup Dezerv, among others. It’s worth highlighting that Oyo saw a major haircut in its valuation while Urban Company raised the amount in secondary and Navi raised the sum in debt. [Top 10 early stage deals] As many as 72 early-stage startups raised $311.83 million funding last month. Manufacturer of high precision tooling for aero-engines and airframes, Unimech Aerospace led the list with a $30 million fundraise followed by renewable energy services company BluPine, electric vehicle and clean energy startup Simple Energy, gen-Z focused fast fashion D2C brand Newme, and wealthtech startup Stable Money which pocketed $28.8 million, $20 million, $18 million, and $15 million, respectively. Further, artificial intelligence startup UptimeAI, biotech firm Immuneel Therapeutics, community-led mobility app Namma Yatri, wedding service provider Meragi, and NBFC Seeds Fincap also raised funding among others. The list of early-stage startups also includes 26 startups that did not disclose their funding amount. For more information, visit here. [Mergers and Acquisitions] The month witnessed 17 acquisition deals. Gaming company Nazara Technologies acquired an additional 48.42% stake in Paper Boat Apps (PBA) from its promoters Anupam and Anshu Dhanuka for a sum of Rs 300 crore while its gaming arm Next Wave Multimedia acquired the intellectual property rights of Ultimate Teen Patti from Games24X7 for Rs 10 crore. The list further counts acquisition of Excelmax Technologies by IT giant Accenture, OneCare by Acko, Ekagrata by Adda247, Koral by Captain Fresh, Centcart by CASHe, BitOasis by CoinDCX, Galleri5 by Collective Artists Network, SiliConch Systems by L&T, and Munitalks by Melooha, among others. [City and segment-wise deals] City-wise, Bengaluru-based startups maintained the top position with 42 deals, contributing around 37% of the overall funding in July. Delhi-NCR and Mumbai followed with 33 and 24 deals, respectively. The list further counts Ahmedabad, Hyderabad, Jaipur, Chennai, Pune, and Kolkata, among others. Segment-wise, fintech startups led the show followed by e-commerce (including D2C brands) and SaaS with 15 and 10 deals, respectively. Healthtech, AI, and Agritech were next on the list. Visit TheKredible for more details. [Stage-wise deals] Series-wise, equivalent to 36 startups raised funding in the seed round followed by 27 Series A, 15 pre-Series A, 13 pre-Seed, and 4 Angel funding deals. Debt-only funding contributed $160.76 million or 15.5% of the overall venture funding across deals. [ESOP buyback] Adda247 and Swiggy announced ESOP buyback programs this month. Edtech platform Adda247 has initiated its first-ever ESOP buyback benefiting over 130 employees, following its acquisition of Ekagrata Eduserv. Meanwhile, food delivery giant Swiggy has rolled out its fifth ESOP liquidity program worth $65 million, providing an opportunity for employees to monetize their equity. These moves highlight the growing trend of startups rewarding employees through ESOP buybacks. [Layoffs, shutdowns and departures] Edtech major Unacademy laid off 250 employees as part of its cost-cutting measures. Similarly, agriculture supply chain firm Waycool underwent its third round of layoffs, affecting over 200 employees. In the content creation space, Pocket FM laid off nearly 200 contract writers based in the US. The startup ecosystem also saw three shutdowns. Vernacular microblogging platform Koo has ceased operations after failing to secure a buyer or sufficient funding. Apollo Tyres has also reportedly discontinued its doorstep car service, Trumigo, due to a lack of traction. In the edtech space, Bluelearn has shut down and will return a significant portion of its raised capital to investors. Edtech major Unacademy has seen the departure of its COO for offline centers, Jagnoor Singh. Similarly, Simplilearn’s Chief Product Officer, Anand Narayanan, stepped down after an eight-year tenure. Zoomcar’s global president has resigned amidst company restructuring while Medikabazaar’s co-founder Vivek Tiwari stepped down as CEO. Eight Roads Ventures’ Asia managing partner Raj Dugar also stepped down after 17 years with the investor, as per media reports. Visit TheKredible to see series-wise deals along with amount breakup, complete details of fund launches, and more insights. [Trends] It’s raining startup IPOs: This year quite a few internet companies such as TBO tech, Digit Insurance, Awfis and Ixigo have got listed on the Indian stock exchange, with all delivering spectacular returns post listing as well. Three more companies including Ola Electric, FirstCry and Unicommerce are all set to make their stock market debut. Moreover, Mobikwik, Swiggy and Avanse have been waiting for approval from the market regulator. Wealthtech on the rise: A clutch of wealthtech startups have managed to score decent funding in the ongoing calendar year. In July, Deserv and Stable Money raked in $32 million and $15 million respectively. As per reports, more wealthtech startups are on the verge of raising new rounds. Geographic expansion: Traditionally dominated by metros like Bengaluru, Delhi-NCR, and Mumbai, the landscape is now witnessing a surge in entrepreneurial activity from smaller cities. Startups hailing from Ankleshwar, Bareilly, Bicholim, Nashik, Rupnagar, and Udaipur have recently secured funding, underscoring the growing potential of these regions. Family offices spreading out: Wealthy families are diversifying their portfolios. Traditionally focused on real estate and fixed deposits, they’re now actively seeking new investment avenues. This shift has led to the creation of separate investment pools and a growing interest in equity markets. In the past month, seven family offices participated in funding rounds. These include the family offices of Sunil Singhania, Jyothi Pradhan (CEO of Kurlon), MS Dhoni, Dr. A Velumani, Vasavi Family Office, Desai Family Office, and a Tamil Nadu-based family office. [Conclusion] As we had predicted in 2023, and earlier this year, the markets are expected to pick up by H2 this year, and here we are. Perhaps the last piece in the puzzle would be an interest rate cut by the Fed, to catalyse a whole chain of events that could lead to a mini-boom yet again. While expecting the highs of 2021 might be too much to hope for ($38 billion), it is not unreasonable to expect the Indian market to attract at least $15 billion in funding in 2025. The strong record of IPOs that is building up will not hurt investor confidence at all. The only thing to watch out for might be a rotation from Fintech and E-commerce to newer and important segments like Healthcare and Climate tech. Both are areas where India has large domestic markets, multiple use cases, and the crying need for solutions that can make a difference. With the kind of huge targets the country has in front, and massive schemes to get close, expect some large deals in the renewables space soon.