Startup Mahakumbh: What funding numbers say about Indian startups

Commerce Minister Piyush Goyal’s critique of startups in the second edition of “Startup Mahakumbh” held at Bharat Mandapam here on Thursday, asking them to focus on high-tech areas like artificial intelligence (AI), electric mobility, robotics, and deep tech, like China, rather than on quick commerce and selling “healthy” ice creams, is reflected by the reality of numbers. 

For venture capital (VC) and private equity (PE) investments in high-tech startups, which include AI, electric vehicles, drones, deep tech, semiconductors, and robotics, collectively have seen a fall in 2024 over the previous year. At a macro level VC/PE investments in these high-tech startups fell from $4.06 billion in 2023 to $3.45 billion in 2024 — a drop of 15 per cent collectively — according to data from Tracxn. 

In the hottest sector of AI, where most global VC funding is going currently, the country’s record has not been anything to write home about. VC investments in this sector, which peaked in 2022 to $5.9 billion, fell sharply to $1.3 billion in 2023, and further to $1.2 billion in 2024. This is despite the government’s AI Mission, which is pushing the pedal by creating computing power at one of the lowest usage cost per hour in the world for Indian startups to use. In the semiconductor/ design space, VC investments have fallen sharply from $134.4 million in 2023 to a fifth at only $28 million in 2024. 

And, in the deep-tech sector, which has caught on across the world, VC investments in India has seen a sharp fall from the peak of 2022 ($2.61 billion) to nearly a third at only $948.1 million in 2024. In 2023, the total investments to startups in this sector was $998.4 million. 

Even in the more consumer-centric and high-profile electric vehicle (EV) space, funding to startups is getting reigned in. In 2022, EV companies, including Ola and Ather, raised over $2 billion, and in 2023 another $1.5 billion as they moved towards going for their initial public offers (IPOs). But with Ola going public in 2024 and its shares getting beaten down and sales falling due to quality and maintenance issues, and Ather still awaiting final clearance from the Securities and Exchange Board of India (Sebi) for its public issue, VCs put in only $1.2 billion in this sector.  

Also in drones, which is supported by a production linked incentive scheme, VC funding is going down — in 2023, it peaked at $103.5 million but fell by 11 per cent to $92.4 million in 2024. The only high-tech segment that has bucked the trend is robotics, which saw the highest investment in 2024 at $83.6 million, registering an over three-fold growth over 2023 when it was at only $25.5 million.