Funding into Indian startups further slipped into a downward trajectory in February with only $598 million in total deals size recorded which is down 38% quarter-on-quarter compared to $962 million in January.
The number of deals also declined to 67 funding rounds in February compared to 84 in the previous month, according to data shared by private investment tracker Tracxn,
Deal volumes have dipped continuously since Q4CY21 as venture capital and private equity investors turn cautious on dealmaking with the economy slipping into the red.
In Q4CY22, Indian startups raised $3.5 billion across 312 rounds, a 68% year-on-year decline compared to Q4CY21 when startups raised a whopping $11.25 billion across 726 rounds.
CY2021 was an anomaly for both Indian and global startups which raised record funding with some quarters breaching the $10-billion mark.
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However, by CY22, investors have cut back deal sizes as investors turned wary about rising inflation, tech stocks meltdown, ongoing war in Russia, and fears of recession.
Despite the ongoing funding slowdown, February had at least three funding rounds above $100 million from InsuranceDekho, FreshToHome, and PhonePe.
Apart from this, 20 new VCs and institutional investors made their first investments in India in February, including names like Kettleborough VC, SBI Holdings, Persol, JSPL, Piper Serica and others, the report said.
There are at least 125 active investors in the Indian startup ecosystem in February with early-stage investors Angelist and LetsVenture earning the top investor spot with 372 and 365 deals respectively.
In addition, Delhi NCR startups saw the maximum funding raised, followed by Bengaluru, Gurgaon, and Mumbai in February 2023, the report added.
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Tracxn further pointed out that there were at least 27 deals recorded in the Series A stages and above in February which declined from 31 deals compared to January.
February also saw around 17 M&A transactions including a $100 million acquisition of smart meters manufacturer Gram Power by I Squared Capital, a $12 million acquisition of online lending platform Upwards by LendingKart, and others.