As one of the major startup hubs in the Asia-Pacific (APAC) region, India has always been a hotbed for venture capital (VC) funding activity. However, the new year has brought with it a funding winter that has been continuing to take a toll on investor sentiments, leading to a sharp month-on-month (MoM) 23.1% decline in VC funding deal value in January 2023, reveals GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Database reveals that a total of 87 VC deals of worth $696.2 million were announced in India during January 2023. This is a decline of 13.9% and 23.1% by volume and value, respectively, compared to announcement of 101 VC deals worth $905 million during December 2022.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “July was the first month of 2022, when the total VC funding raised by Indian startups fell below $1 billion as funding winter took a toll on deal activity and thereafter several other months of the year also followed the suit. As investor cautiousness continues to prevail in 2023 as well, the first month of the year also saw the total VC funding below $1 billion.”
The decline is even bigger when compared with deals volume and value for January 2022. While VC funding deals volume for India registered a year-on-year (YoY) decline of 62.5% in January 2023, the corresponding deal value fell by a massive 80.3%.
Bose concludes: “Several factors seem to be in play for the dent in investor sentiments and the noteworthy among them are macroeconomic challenges, recession fears, and concerns around startup valuations.”
