After weathering a harsh funding winter, India’s startup ecosystem has begun to display promising signs of recovery, with funding on the uptick in April 2024. According to recent data, between April 1 and April 26, Indian startups successfully raised a total of $868 million, marking a significant 15% increase from the $754 million raised in March. This resurgence comes as a welcome relief after funding plummeted to a five-year low of $512 million in January earlier this year.
In addition to the surge in funding, the number of deals also witnessed an uptick, with 90 deals recorded in April 2024 compared to 63 in the preceding month.
However, despite the month-on-month growth, there remains a slight year-on-year decline in startup funding, with April 2024 figures down 2% from $888 million in the corresponding month last year. Moreover, the current funding levels are a substantial 66% lower than the $1.52 billion raised by Indian startups in April 2022.
The trend of year-on-year decline was particularly pronounced in the first quarter of 2024, with funding plummeting by 33% year-on-year to $2 billion, marking a seven-year low.
Seed and growth-stage startups, however, displayed resilience in April, experiencing a year-on-year increase in funding. Seed-stage startups secured $178 million across 46 deals, reflecting a remarkable 286% surge from $46 million raised a year ago across 25 deals. This increase was partly attributed to a $26 million investment secured by Lyskraft, a new omnichannel fashion startup founded by former Zomato senior executive Mohit Gupta and Myntra’s founder Mukesh Bansal.
Meanwhile, growth-stage startup funding surged by 78% year-on-year to $332 million in April, primarily driven by a mega funding round secured by iBUS, a digital infrastructure solutions company, which raised $200 million in strategic funding from the National Investment and Infrastructure Fund (NIIF).
However, late-stage funding continued to face challenges, with late-stage startups managing to raise only $314 million across 13 deals in April, marking a significant decline of 50%.
The enterprise tech sector emerged as the top-funded sector in April, securing $305 million across 21 deals, followed by the fintech sector, which bagged $211 million across 12 deals. Cleantech also garnered attention, buoyed by significant funding rounds for IPO-bound Ola Electric and GPS Renewables.
Geographically, Bengaluru retained its position as the top startup hub, attracting $432 million across 28 deals in April. Delhi NCR followed closely with funding of $135 million, while Chennai surpassed Mumbai to claim the third spot, with startups based in the Tamil Nadu capital securing $87 million.
The funding landscape reflects a shift in sectoral preferences and geographical trends, indicating the dynamic nature of India’s startup ecosystem as it continues to evolve and adapt to changing market dynamics.
