A recent report indicates a notable decline in investments by private equity (PE) and venture capital (VC) funds in Indian companies, marking a significant shift in the funding landscape compared to previous years.
In 2023, investments in homegrown companies totaled $27.9 billion across 697 transactions, a considerable decrease from $47.62 billion across 1,364 deals in 2022, according to data from a recent report.
Furthermore, data from Venture Intelligence and the Indian Private Equity and Venture Capital Association (IVCA) reveals a trend of increased capital outflows from the country by private equity players, with total exits reaching $19.34 billion from 248 companies in 2023, compared to $18.45 billion from 233 exits in 2022.
The decline in venture capital funding for startups is particularly pronounced, with a 72% decrease this year compared to the previous year. New-age companies in India received $7.5 billion across all stages as of December 15, compared to $25 billion in the previous year.
The decrease in funding can be attributed primarily to a slowdown in late-stage deals (Series D and above), which saw funding levels more than halved to $3.5 billion from $11.70 billion in 2022.
Additionally, early-stage funding deals experienced a significant decline, with the number of deals nearly halving from 871 rounds to 414 rounds compared to the previous year.
Growth-stage funding rounds also saw a substantial drop, totaling $1.9 billion through 99 deals, down from $6.84 billion across 230 deals in 2022.
India’s position in the global ranking among the highest-funded geographies also witnessed a decline in 2023, slipping to fourth place after the US, the UK, and China. This marks a significant shift from previous years when India held the third position in 2021 and 2022.
In the third quarter of 2023, India further slipped to the fifth position among the highest-funded countries, trailing behind the US, the UK, China, and France, underscoring the challenges faced by Indian startups in securing funding amidst changing market dynamics.
