2023: A Landmark Year for Indian Startups with $11 Bn Raised
The year 2023 was a challenging yet rewarding one for Indian startups, as they raised more than $11 billion in venture capital across 984 deals, according to startup data intelligence platform TheKredible. Despite the funding crunch, economic slowdown and mass layoffs, the ecosystem also witnessed two new unicorns, several IPOs and mergers and acquisitions.
Funding Trends
The total funding amount in 2023 was a sharp decline from $25 billion in 2022 and $38 billion in 2021, but on par with 2020. The number of deals also dropped from 1,625 in 2021 to 1,556 in 2022 and 984 in 2023. However, the average deal size increased from $15.4 million in 2021 to $17.8 million in 2022 and $22.4 million in 2023.
The funding activity was uneven throughout the year, with March and December being the most funded months with $1.37 billion and $1.6 billion, respectively. On the other hand, July, August and November saw monthly funding fall below $500 million.
The growth stage startups dominated the funding landscape, as they raised $8.8 billion in 181 deals, accounting for nearly 80% of the total funding amount. The early stage startups raised $2.5 billion in 656 deals, while 147 startups did not disclose their deal size.
Top Deals and Sectors
The top three growth stage deals in 2023 were PhonePe ($850 million), Flipkart ($600 million) and Lenskart ($600 million). PhonePe and Lenskart raised money in multiple tranches, while Flipkart secured a single round from Walmart and other investors. Other notable growth stage deals were DMI Finance ($400 million), Ola Electric ($385 million), Udaan ($300 million), Byju’s ($250 million), Zepto ($200 million), Perfios ($200 million) and GreyOrange ($200 million).
The top three early stage deals in 2023 were InsuranceDekho ($150 million), Agilitas Sports ($100 million) and ChargeZone ($75 million). InsuranceDekho raised another $60 million in a Series B round later in the year. Other notable early stage deals were BluSmart ($70 million), Sarvam AI ($50 million), Zolve ($40 million), NirogStreet ($35 million), Flickstree ($30 million), Zetwerk ($30 million) and Credgenics ($30 million).
The most funded sectors in 2023 were fintech, ecommerce, edtech, healthtech and mobility. Fintech alone attracted more than $3 billion in funding, followed by ecommerce with $2.4 billion and edtech with $1.2 billion. Healthtech and mobility raised $800 million and $700 million, respectively.
Unicorns, IPOs and M&As
The year 2023 also saw two new entrants to the unicorn club: Zepto and InCred. Zepto is a B2B ecommerce platform that connects retailers with wholesalers and manufacturers. InCred is a digital lending platform that offers personal loans, education loans, home loans and business loans.
Several Indian startups also made their debut on the stock markets in 2023, such as Nykaa, Policybazaar, CarTrade, Zomato, Paytm and MobiKwik. Nykaa and Policybazaar had successful IPOs, while CarTrade, Zomato, Paytm and MobiKwik faced lukewarm responses from investors.
The year also witnessed some notable mergers and acquisitions in the startup space, such as Ola acquiring Etergo, Unacademy acquiring PrepLadder, Byju’s acquiring WhiteHat Jr and Aakash Educational Services, Reliance acquiring Urban Ladder and Netmeds, Flipkart acquiring Mech Mocha and ClearTax acquiring Karvy GST.
Outlook for 2024
Despite the challenges posed by the pandemic, inflation and interest rates, the Indian startup ecosystem showed resilience and innovation in 2023. Industry experts believe that the ecosystem will continue to witness maturity, which will lead to stronger fundamentals and high-quality startups.
Some of the sectors that are expected to grow in 2024 are agritech, deeptech, gaming, social commerce and SaaS. Agritech startups are leveraging technology to improve farm productivity, supply chain efficiency and market access for farmers. Deeptech startups are using cutting-edge technologies such as artificial intelligence, blockchain, cloud computing and internet of things to solve complex problems across various domains. Gaming startups are creating immersive and engaging experiences for gamers across genres and platforms. Social commerce startups are enabling online shopping through social media platforms and communities. SaaS startups are offering software solutions for various business functions and verticals on a subscription basis.