India emerged as the fourth highest-funded country in the global tech startup ecosystem during the first half of this year, with startups raking in a whopping $4.1 billion from private equity (PE) and venture capital (VC) investors, showed data available with Tracxn.
While this was only a marginal 3.5% increase from H2 2023, it indicates investors’ continued faith in the country’s technology sector despite macro market headwinds, hoping to make a windfall in the years to come, said fund managers. Tech entrepreneurs raised around $3.96 billion in June-December 2023, according to the Tracxn data. The US led the overall funding volumes, followed by the UK and China.
“India has seen a steady uptick in investments despite deal activity being broadly muted in Asia,” said Nruthya Madappa, Partner at early-stage VC firm 3one4 Capital. “We expect this to increase through late 2024 with renewed participation from global investors in response to strong macros and robust tech IPO performance,” she added.
While retail, enterprise applications, and fintech garnered the highest amount of funding during the first six months of this year, other sectors to watch out for within the larger technology umbrella are specialty chemicals, biomaterials, EV financing, and healthcare, among others, said experts.
“Investors are bullish on technology investments in India… the absolute quantum of capital coming into the country will continue to increase on the back of robust GDP growth and strong economic tailwinds,” said Pratip Mazumdar, co-founder & partner at Inflexor Ventures.
Among the significant deals clocked in India this year, quick commerce app Zepto amassed a whopping $665 million in funding from a slew of investors such as Lightspeed Venture Partners, Nexus Venture Partners, and StepStone Group, among others.
In May, e-commerce behemoth Flipkart raised $350 million from Google, while a month before that, Advent International pumped $297 million into Apollo HealthCo, a subsidiary of Apollo Hospitals.
In the startup space, companies that garnered funding include social commerce player Meesho, transportation firm Shadowfax, and healthcare platform API Holdings, among others.
Unicorns in the making
At least 33 startups have been added to the soonicorn list during the first six months of this year, including names such as healthtech startup Ultrahuman and electric vehicle manufacturer PURE EV.
While this is a 60% drop from the second half of 2023, experts warded off concerns, highlighting India’s enormous potential to build big, disruptive businesses in the long term.
As many as three companies made it to the coveted unicorn list this year. These are on-demand intra-city logistics provider Porter, fintech firm Perfios, and AI startup Krutrim.
“There are several Indian companies building products for the world… that’s where the opportunity lies. A new lot of unicorns could come up from this segment,” Ruchira Shukla, a former IFC executive who recently founded venture firm Synpases, had earlier told DealStreetAsia.
China recently overtook India in terms of tech funding to grab the third spot during the Jan-June period. During the same period last year, India was in the third position, while China was fourth.
“Deals in the current environment are taking longer to close due to prolonged due diligence. Additionally, investors have also been waiting for the elections to be over to get clarity on political stability,” said Mazumdar.