Deal activity in the Indian startup ecosystem is on the recovery path after the 2023 slump with growth across key metrics, viz., deal value, deal volume, and exits last year except fundraising by VC investors. The fundraising activity in 2024 dropped by around 35 per cent to $2.7 billion, the lowest since 2020, as accumulated dry powder among investors continued to loom and deployment remained cautious.
According to the latest report on the Indian venture capital ecosystem by IVCA and Bain & Company, VC fundraising peaked at $8 billion in 2022, up from $3.4 billion in 2021 and $3.2 billion in 2020, before plummeting to $4 billion in 2023 and further plunging to $2.7 billion in 2024.
There was around a 40 per cent decline to $49 million in the average size of funds raised by investors in 2024 over 2023 following 2022 record levels of $83 million and only modest recovery in capital deployment. Also, large fund-raises of more than $100 million declined, going from 10 to four over 2023–24.
However, domestic funds dominated fundraising in 2024, extending last year’s trend. Barring Accel’s $650 million raise, 95 per cent of fund-raising activity was led by domestic funds such as $300 million raise by Stellaris Venture Partners, $130 million by Playbook Partners, $119 million by IN-SPACe, $75 million by Alteria Capital, and others.
Further, the ecosystem saw an increase both in the number and share of maiden funds from 20 to 24 funds and from 25 per cent to 28 per cent share over 2023–24, respectively.
Overall, the VC and growth funding in India jumped by around 1.4x to $13.7 billion in 2024 from $9.6 billion in 2023, outpacing Asia-Pacific VC funding growth, which remained in line with 2023 levels. According to the report, this growth was driven by a favorable macroeconomic environment, an improved regulatory landscape, and a few large pre-IPO deals.
“The start-up ecosystem will continue to thrive as skilled professionals turn entrepreneurs, enhancing the quality of early-stage deals. More investment will flow in areas like climate tech, AI, consumer tech, fintech, and edtech. We will also see a rise of hybrid models that blend digital and physical presence,” said Lightspeed India Partners.
Deal volume also grew from 880 to 1,270 over 2023– 24, with strong momentum across stages. Early-stage deals remained salient, comprising around 82 per cent of deals while the average deal size held steady by around $10.8 million in comparison to around $10.9 million in 2023.
Exits also jumped gradually by around 4 per cent to $6.8 billion in 2024 from 2023. Importantly, public market exits increased from around 55 per cent to approximately 76 per cent of total exit value over 2023–24 and secondary exits increased by around 1.6x in value, with a corresponding approx. 1.3x increase in average exit size.
“2024 was a defining year for Indian start-ups as they matured into established businesses, settling questions about market depth, profitability, and exits as the next wave of innovation emerges, as evidenced by scaled-up unicorns turning profitable and a wave of successful startup IPOs,” said Elevation Capital.