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Indian startups mop up $2.77 Bn in March 2024 quarter: Report

EntrackrEntrackr · 1y ago
Indian startups mop up $2.77 Bn in March 2024 quarter: Report
Medial

Indian startups registered a steady growth in fund inflow during the first quarter of 2023 as they managed to cross $2.75 billion in funding. Importantly, funding in March stood out for crossing the $1 billion threshold for the first time in 2024. However, even as funding recovers, layoffs, shutdowns and departure of top-level executives continue to loom. Indian startups mopped up $2.77 billion across 326 deals in the March quarter or Q1 2024, as per data compiled by TheKredible. This included 74 growth-stage deals worth $1.87 billion and 213 early-stage deals amounting to $898 million. There were 39 undisclosed rounds. Unlike in the first quarter of 2023, two startups – Krutrim SI Designs and Perfios – entered the unicorn club after their latest fundraise in the first quarter of 2024. [Month-on-Month and Year-on-Year trend] March saw a decent jump in funding to $1.18 billion from $875 million in February and over $700 million in January. However, on a year-on-year basis, Q1 2024 recorded a fall from $12 billion in Q1 2022 and $3.4 billion in Q1 2023. [Top growth stage deals] Biotech startup Engrail scooped up $157 million in its Series B funding round to become the top-funded growth stage company in the first quarter of 2024. Audio series platform Pocket FM and logistics company Shadowfax managed to go past the $100 million funding mark in Q1 2024. Capillary Technologies, Perfios, Vivifi, Lohum, AiDash, ShareChat and Wow! Momo, were among the top 10 growth-stage deals. [Top early-stage deals] Digital lending platform mPokket, AI company Krutrim, energy tech company International Battery Company (IBC), blockchain company Avail, and generative AI startup Ema topped the list of early-stage startups. Check TheKredible for a full list. [City and segment-wise deals] City-wise, Bengaluru-based startups remain on top with 122 deals, contributing around 54% of the overall funding in the first quarter of 2024. Delhi-NCR and Mumbai followed with 77 and 54 deals, respectively. The list further counts Pune, Hyderabad, Chennai, Kolkata, Jaipur, Ahmedabad, and Thane among others. Segment-wise, e-commerce startups (including D2C brands) led the list with 64 deals followed by fintech (47), healthtech (31), SaaS (26), EV (15), AI (13), and edtech (13) startups. The complete breakdown of the city and segment can be found at TheKredible. [Stage-wise deals] Series-wise, 95 startups raised funding in Seed round followed by 71 Series A, 35 Pre-Series A, and 33 Pre-seed deals. Among early-stage, as many as 4 startups raised funding in their angel round. While 22 startups raised debt funding worth $276.65 million during the period. [Most active investors] Early-stage venture capital firm Inflection Point Ventures and Blume Ventures have emerged as the most active investors in Q1 2024 with 11 and 10 investments, respectively. Venture Catalysts was next on the list with nine deals followed by Fireside Ventures, Anicut, Accel, and Stride Ventures. The full list can be found at TheKredible. [Mergers and acquisitions] The first quarter of 2024 registered 26 merger and acquisition deals. Acquisition of Tapasya Educational Institutions by Veranda, InSemi by Infosys, Qdigi Services by Onsitego were the top 3 disclosed mergers and acquisitions deals. During the period, listed gaming firm Nazara’s subsidiary Nodwin acquired two startups: Comic Con India and Ninja Global FZCO. Among the undisclosed deals, Kuvera was acquired by fintech unicorn CRED, Captain Fresh took over CenSea while OneVerse acquired three startups including Spartan Poker, BatBall11, and Calling Station. Check the full list here. [Layoffs, shutdowns and departures] Layoffs continued in the March quarter as more than 1,100 employees received pink slips. Among them, foodtech company Swiggy topped the list with laying off of 350 employees followed by Cult.fit, InMobi, and Pristyn Care with 150, 125 and 120 employees, respectively. During the first quarter, five companies shut their operations. The list includes Resso, Rario, OKX India, GoldPe, and Muvin. Rario, however, added that it will launch a brand new platform that will enable users to play new and engaging cricket-based games. Besides layoffs and shutdowns, nearly two dozen top-level executives hung up their boots. Vijay Shekhar Sharma, founder of Paytm Payments Bank, resigned as the part-time non-executive chairman and board member of the company. Meanwhile, Third Wave Coffee’s chief executive officer Sushant Goel stepped down from his position to become a board member. The list also includes Indus Appstore CEO Rakesh Deshmukh, DealShare’s co-founder Sourjyendu Medda, and Fashinza’s co-founder Jamil Ahmed. [ESOP buyback] Amid all the ups and downs, the startup ecosystem witnessed employees stock buyback by growth and late-stage companies. For context, e-commerce company Meesho rolled out its largest ESOP buyback worth $25 million for 1,700 employees. Community management app MyGate and edtech company Classplus also announced their employee stock buyback program earlier this year. The full list can be found here. Visit TheKredible to see series-wise deals along with amount breakup, complete details of fund launches, and more insights. [Conclusion] As funding revives, it is safe to say that the trend in layoffs will also subside in the coming months, if not weeks. The strength in fintechs continues, and the category will continue to seek more money and throw up the next big startups, as scale arrives faster for many. Newer categories, be it AI, Chip Design, or niche parts of healthtech look set to emerge soon, going by the churning in the markets. The big hope is that the many corporate governance issues that have plagued the ecosystem in the past two years will also take a backseat now, thanks to lessons learnt hopefully. Looking at the numbers, especially for Q1 2022 ($12 billion), many would say that opportunities and capital have been wasted. But that is the very nature of the Startup world, with tiny amounts of money and a dollop of innovation sometimes achieving what no amount of money thrown at a problem doesn’t. We remain optimistic that by Q4 of this year, India’s startup ecosystem will be stronger and more diversified than ever before.

Indian startups show sign of recovery with $7 Bn funding in H1 2024

EntrackrEntrackr · 1y ago
Indian startups show sign of recovery with $7 Bn funding in H1 2024
Medial

The Indian startup ecosystem is going through a recovery phase: there have been larger funding rounds, an increase in the number of deals, a surge in secondary deals and ESOP buybacks, and a decline in layoffs. As per data compiled by TheKredible, Indian startups raised nearly $7 billion in funding during the first half of 2024. This is more than the $5.92 billion raised in H1 2023. But it’s also far less than $20 billion in H1 2022 which now seems like the golden phase for startups, at least in terms of venture capital inflow. The $7 billion funding consisted of 182 growth or late stage deals worth $5.4 billion and 404 early-stage deals worth $1.54 billion. Meanwhile, 99 were undisclosed deals. During the first half, Indian startups produced a couple of unicorns: Perfios and Krutrim SI Designs. In 2023, only two startups managed to go past the unicorn valuation while 2022 and 2021 saw the emergence of 26 and 44 unicorns, respectively. [Y-o-Y and M-o-M trend] As mentioned above, there is a significant increase in the number of startup deals and funding in H1 2024 from $5.92 billion in H1 2023. If we see the last four consecutive half yearly data, H1 2024 stands at the top in terms of total amount raised. The growth can be attributed to a bunch of $100 million plus rounds and mega deals bagged by late stage firms such as Zepto, Flipkart, PharmEasy and Lenskart. When it comes to month-on-month trends, June saw nearly $2 billion in funding which is more than double of the average of $1 billion monthly funding until May this year. [Top 10 growth stage deals in H1] Late stage companies such as Zepto, Flipkart, PharmEasy and Lenskart were on the top with $665 million, $350 million, $216 million, and $200 million funding, respectively. Lenskart’s $200 million funding was a pure secondary transaction play whereas Zepto may have also had some secondary component in the last funding round. Overall, all startups in the top 10 list have raised more than $100 million each during the first six months of 2024. The list includes Engrail, Atlan, Pocket FM, Nephroplus, SEDEMAC and Shadowfax. [Top 10 early stage deals in H1] Invite-only networking platform SCOPE led the funding chart for early stage startups with $90 million funding. This was followed by AI startup Krutrim, blockchain startup Avail, e-commerce startup Indkal and battery tech startup IBC. Lyskraft, Ema, StockGro, Hunch and Rozana also made it to the top 10 list of early stage deals. Notably, more than 30 early stage startups have raised over $10 million each during H1 2024. [Mergers and Acquisitions] The first half of 2024 saw 55 mergers and acquisitions, which is lower when compared to the previous years. The year 2021 saw more than 250 mergers and acquisitions which declined to 204 in 2022 and further reduced to 145 in 2023. Even if we double the number of M&A, it will hover around 100 in total by the end of 2024. There were stress deals during the period which included the acquisition of ZestMoney by DMI Group, MX Player by Amazon, Kuvera by CRED, Spartan Poker by OneVerse, and ET Money by 360 One (formerly IIFL Wealth). Check the list for more details: [City and segment wise deals] Bengaluru, once again topped the list with 253 startups from the city having raised more than $2.83 billion in funding during 2023. This accounted for 40% of the total funding. Delhi-NCR-based startups followed with 164 deals amounting to $1.3 billion. Mumbai, Hyderabad and Pune made it to the top five list. Notably, Mumbai-based startups contributed to nearly 22% of the total funding whereas Delhi NCR-based startups accounted for 18.76% of the overall fund inflow. Segment wise, e-commerce was at the top with 124 startups raising over $1.87 billion. Fintech, healthtech, SaaS and EV startups were next on the list. Amount wise, EV startups raised more money than SaaS and healthtech. Agritech, foodtech, edtech and proptech saw their downfall during the first half of 2024. [Stage wise deals] In H1 2024, seed and pre-seed stage startups saw 266 deals amounting to more than $457 million. Series A and pre Series A saw 134 and 80 deals, respectively. There were 58 debt funding worth $784 million and 5 pre-IPO rounds worth nearly $250 million. Check TheKredible for more details. [Layoffs, shutdowns and departures] Layoffs, shutdowns and departures continued even in 2024. However, there was a sharp decline when compared with the previous years. For context, Indian startups saw 3,300 people being laid off during H1 2024 which is roughly one-third of the over 9,000 in H2 2023 and 15,000 in H1 2023. Byju’s, ReshaMandi, Swiggy, Ola, Cult.fit, Healthifyme, Scaler and PrepLadder topped in terms of laying off employees during the first half. During the first quarter of 2024, five companies shut their operations. The list includes Resso, Rario, OKX India, GoldPe, and Muvin. Rario added that it will launch a brand new platform that will enable users to play new and engaging cricket-based games. However, only one startup announced its shutdown during the second quarter taking the overall shutdown to six in H1. In 2023, more than 15 startups shut their operations. High profile departures were a big concern during the first half of 2024. As per data compiled by TheKredible, 45 top level executives left their posts. These include co-founders, CEOs, CFO, CBO, COO, and managing directors, among others. [Comparison] For a better understanding of startup funding, we have created a comparison graph for the first and second quarter of the year which showed that the number of deals and total funding saw an uptick in Q2 when compared to Q1. [Trends in H1 2024] Surge in generative AI and spiritual tech deals: Overall, AI startups saw 27 deals amounting to $237 million. Generative AI startups grabbed a significant portion of the total funding. In the past six months, these startups have managed to mope up nearly $100 million. The list includes Sarvam AI, Ema, Neysa, Vodex, and KonProz, among others. Spiritual tech startups also saw an uptick in the number of deals. In the ongoing calendar year, such startups have raised more than $36 million and some new rounds are in the pipeline. Maiden funding for established fashion brands: During H1, a clutch of fashion and apparel brands raised their maiden institutional round. In May, A91 Partners led a $21 million round in TechnoSport whereas Libas raised $18 million led by ICICI Venture’s fund. Recently, Rare Rabbit raised $18 million in primary capital led by A91 Partners. The round is expected to close at around $50 million. ESOP and secondary deals: More than 10 startups announced their ESOP buyback program worth nearly $58 million in H1 2024. While the majority of them did not disclose the amount, Meesho, Urban Company and Pocket FM announced their largest ESOP buyback program. Similarly, secondary transactions have also increased during the first six months. Some of the biggest beneficiaries of secondary transactions are Lenskart, Meesho, Shadowfax, Fibe, Wow! Momo, Porter, among others. Startup IPOs on the rise: In the ongoing calendar year, TBO tech, Digit Insurance, Awfis and Ixigo have been listed on the stock exchanges while Unicommerce, FirstCry and Ola Electric got final approval from SEBI and Mobikwik, Swiggy and Avanse have been waiting for approval from the market regulator. Overall, 2024 appears to have better prospects for startups in the public market. In 2021, more than 10 startups listed on stock exchanges. This number plummeted in 2022 (two IPOs) and 2023 (five IPOs). Moreover, a bunch of companies are assessing the right time to launch their IPO, Zepto, Flipkart, PharmEasy, The Good Glamm Group, and others may announce their exact IPO timeline anytime soon. Debt deals: Besides increase in equity and secondary deals, debt deals also contributed a significant portion in H1. As per data, H1 2024 saw 57 debt only deals amounting to $784 million. There were several deals which included equity as well as debt components. However, we couldn’t ascertain the actual breakdown of such deals which may push the overall debt to more than $1 billion in the said period. [Conclusion] While the peaks of H1 2022 might take some time to be reached and crossed again, considering the typical cycle of at least 3-5 years for such funding peaks, things are certainly improving fast. While stability in government helps, it is the booming stock markets that will drive funding for startups too, as investors cash out gains and redeploy from successful IPOs or broader market gains. Ironically, many firms that could barely get VC or PE funding have managed IPOs in recent weeks, further underscoring the case for a correction in the stock markets or a diffusion of the bullishness to startup funding as well. But while the markets will continue to value revenues and some profitability ideally, the real job of backing ideas and innovations will also benefit as multiple VCs, family offices and other investors return to the startup funding market to seed the next crop of startups.

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