VC investment in Indian startups declines by 76.4% YoY in H1 2023: Report

India is among the top five global markets in terms of both VC funding deal volume and value and has experienced a relatively higher impact compared to the US, China, and the UK

Venture capital (VC) funding activity in India faced a setback in the first half (H1) of 2023, with a noticeable impact on its value. According to GlobalData, a data and analytics company, a total of 568 VC funding deals worth $3.7 billion were announced in India during this period. This represents a year-on-year (YoY) decline of 43.3 per cent in the number of deals and a significant drop of 76.4 per cent in terms of overall value.

Aurojyoti Bose, Lead Analyst at GlobalData, explains that the challenging economic scenario globally had an adverse effect on investor sentiment, leading to subdued VC funding activity in key markets like India.

“Owing to the challenging economic scenario, investor sentiment had a dent globally. As a result, several key global markets, including India, have experienced subdued VC funding activity. The steep decline in funding value could also be a signal of prolonged funding winter and severity of investor cautiousness,” Bose said.

Comparing H1 2023 to H1 2022, the total funding value in India decreased by more than four times. GlobalData's analysis of the Financial Deals Database revealed that Indian startups raised $15.8 billion across 1,002 VC funding deals in H1 2022.

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Bose added, “Apart from macroeconomic challenges and recession fears, concerns around startup valuations also seem to take a toll on investor sentiments in the country."

Bose stated that India was among the top five global markets in terms of both VC funding deal volume and value. However, India has experienced a relatively more significant impact compared to the United States, China, and the United Kingdom.

Elaborating on this, the report adds that in H1 2023, the VC funding deal volume for the US, China, and the UK declined by 34.7 per cent, 15.8 per cent, and 28.6 per cent, respectively, compared to the previous year. The corresponding decline in funding value for these markets was relatively lower, at 49.2 per cent, 36.3 per cent, and 54.7 per cent, respectively.

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