Startup funding: Indian startups may heave a sigh of relief soon as investors expect the funding spring to return over the next six to 12 months after a prolonged funding winter. Consultancy firm RedSeer on Thursday, citing a survey of 21 investors in June this year, said that 50 per cent of respondents expect six-12 months’ time to funding spring while 22 per cent expect 12-18 months’ time and another 11 per cent said it might take more than 18 months.
“I think it will probably be nine to 12 months before the market environment stabilizes. I believe that growth investing will pick up then as there is a lot of capital available to be invested,” said Hemant Taneja, MD and CEO, General Catalyst.
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The survey report noted that startup funding in value and volume in 2023 is expected to revert to the long-term trend line. In other words, the value and volume may recover back to pre-2021 levels. $12-15 billion across 700-900 funding deals is expected in 2023, in line with around $12 billion invested in 2018, 2019 and 2020 across 833, 810 and 953 deals before it peaked at $42 billion across 1,584 deals in 2021 and $25 billion in 1,519 deals in 2022. In 2024, the funding is likely to recover to $15-20 billion in 1,000-1,200 deals.
Early and growth-stage funding deals have been a consistent bright spot with around 90 per cent of all deals made at seed or early stages since 2017. In 2023, PhonePe had led the biggest funding rounds’ tally with $650 million followed by $600 million raised by Lenskart, the report showed.
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Moreover, the number of active investors in the Indian startup ecosystem has grown 2x in the past four years from around 400 in 2018 to around 900 in 2022 along with 9x growth in the number of government-registered startups from approximately 10,000 in 2018 to around 90,000 in 2022.
The report added that the next set of unicorns in India will come from D2C beauty and personal care, D2C health and wellness, diagnostics, gaming, and personal loans in the B2C segment. In terms of B2B segment, CRO or CRM, industrial eB2B, insurtech, SaaS-DevOps and Saas- Finance are verticals to churn out unicorns.