January has brought a ray of hope for early-stage startups in India, as they experienced a surge in funding activities, marking a departure from the prolonged funding winter. According to data from Venture Intelligence, Indian startups in the seed to early stages sealed 37 deals in January, closely trailing the 40 deals recorded in the corresponding period last year. This positive trend signifies a potential thaw in the funding environment.
While the total investment size dipped slightly to $129 million, reflecting a 14 percent decrease from the $150 million recorded in January 2023, early-stage players such as Fireside Ventures, Anicut Capital, and Matrix Partners emerged as the most active investors. They replaced Peak XV Partners and Accel India, among others, dominating the investor charts in January.
Dipanjan Basu, co-founder and partner at Fireside Ventures, expressed optimism, stating, "As a consumer-focused fund, we have always been bullish on startups building for the new Indian consumer. The deal momentum continues to be bullish."
However, the growth-stage deals in India tell a different story, with only 13 deals in January compared to 27 in the same period last year. The deal amount also experienced a substantial decline, plummeting to $206 million from $589 million, marking a 65 percent fall.
In contrast, late-stage deals have remained stagnant at three in both January 2024 and 2023. Yet, there was a significant 41 percent decrease in the funding amount, which dropped from $52 million in January 2023 to $31 million in the same month this year.
Anand Lunia, founding partner of IndiaQuotient, noted an increased concentration at the seed stage, attributing it to a clear decline in series A, B, and later-stage deals. The overall investment scenario for Indian startups has been affected, as new-age tech companies secured only $366 million in 53 deals in January, reflecting a 64 percent drop from the $1,027 million in 48 deals recorded in December. Moreover, this represents a substantial 54 percent year-on-year decline from $792 million in 70 deals in the corresponding period last year.
