VC investment in India tumbles 74.6% YoY to $3.4 billion during January-May 2023

India's venture capital (VC) funding landscape faced a harsh funding winter during the first five months of 2023, witnessing a substantial 46.1% year-on-year (YoY) drop in VC deals volume and a massive 74.6% decline in funding value during the period, reflecting the challenging funding environment, according to GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Financial Deals Database reveals that 459 VC funding deals worth of $3.4 billion were announced in India during January-May 2023 compared to the 851 VC deals of worth $13.3 billion announced during January to May 2022.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The massive decline in funding value reflects the magnitude of the impact that the funding winter had on India. With macroeconomic challenges, mounting recession fears and ongoing geopolitical tensions still prevalent, it seems to be a prolonged and harsh funding winter for the country.”

Nevertheless, despite the setback, India continues to be a key Asia-Pacific (APAC) market for VC funding activity and stands just next to China in terms of both deals volume and value. India held 16.4% share of the total number of VC deals announced in the APAC region during January to May 2023 while its share of the corresponding deal value stood at 13%.

India is also among the top five markets globally. It held 5% share of the total number of VC deals announced globally during January to May 2023 while its share of the corresponding deal value stood at 3.2%.

Some of the notable VC funding deals announced in India during January to May 2023 included around $250 million worth of fundraising by PhysicsWallah, $200 million secured by PhonePe, and $120 million worth of fundraising by KreditBee.

Bose concludes: “The funding winter experienced by India's venture capital landscape in early 2023 has undoubtedly been severe. However, India remains a resilient and promising market both at regional as well as global level, with notable deals reflecting the ongoing potential and attractiveness of the country's startup ecosystem.”