ETtech Deals Digest: Indian startups suffer from funding frostbite, raise $5.5 billion in the first half of 2023

The funding landscape for startups witnessed a 72% drop compared to the previous year. In H1 2022, $19.5 billion was raised across 1,576 funding rounds. And in comparison to the second half of 2022, when the funding winter took hold, investments have further declined by 23%. During H2 2022, startups secured $7.1 billion in funding.

The funding slowdown was secular, as it was evident across all stages, from seed to late stage. During the first half of 2023, investments at the seed stage amounted to $352 million, spread across 386 rounds. However, this figure marked a significant decline of 65% when compared to the $1 billion that startups received in seed funding during the corresponding period in 2022.

Similarly, early-stage startups faced a funding setback, with $1.3 billion raised across 124 rounds in H1 2023. This represented a substantial decline of 73% compared to the $5.1 billion secured across 347 rounds in H1 2022.

Late-stage funding bore the brunt of the slowdown, as startups managed to secure $3.77 billion across 40 rounds in the first half of 2023. This amount reflected a significant drop of 71% compared to the $13.12 billion raised by startups in late-stage investments during H1 2022, spread across 157 rounds.

Notably, the Indian startup ecosystem, which saw the emergence of 19 new unicorns in the first half of 2022, is yet to see one this year.

Discover the stories of your interest

Here are the biggest funding stories of 2023 so far: ADIA signs $500 million cheque for 10% stake in Lenskart at $4.2 billion: Abu Dhabi Investment Authority (ADIA) and Lenskart, the largest eyewear retailer in Asia, has signed a definitive agreement for a $500 million investment by the Gulf Sovereign wealth fund (SWF). The capital raise by the omni channel eyewear retailer – its largest till date – will be mostly through a secondary sale of shares with a small primary round consisting of growth equity. The fundraise was done at a $4.2 billion valuation and will result in ADIA becoming one of the largest shareholder in Lenskart with a 10% stake.

PhonePe raises $350 million funding from General Atlantic at $12 billion pre-money valuation: Digital payments major PhonePe said it has raised $350 million in funding from global private equity firm General Atlantic at a pre-money valuation of $12 billion, making it the most valuable privately held Indian fintech firm. The investment marks the first tranche of an up to $1 billion fundraise that started this month, with other global and Indian investors also participating in the round, the company said.

PhonePe racks up additional $200 million from Walmart: PhonePe said that it raised an additional $200 million (about Rs 1,650 crore) from majority shareholder Walmart, as part of an ongoing $1 billion financing round at the digital payments company. The current round of funding values PhonePe at $12 billion pre-investment, which has made it the most valuable fintech company in the country, surpassing Razorpay that was last valued at $7.5 billion.

KreditBee raises $120 million funding in new tranche from Advent International, others: Credit-based fintech startup KreditBee said it has raised $120 million more from investors in Series D funds, taking the size of the round to $200 million. US-based private equity giant Advent International has invested $100 million in this tranche while others have put in an additional $20 million, the Bengaluru-based company said.

Supply chain financing startup Mintifi raises $110 million: Supply-chain financing platform Mintifi has raised $110 million in a fresh round of funding led by Premji Invest, with participation also from existing investors Norwest Venture Partners, Elevation Capital and International Finance Corp. Almost 90% of the amount has been raised by selling new shares, with the proceeds going to the company. The remaining 10%, raised through secondary shares, is to provide liquidity to employees and early investors, cofounder Anup Agarwal told ET.

Meat delivery startup FreshToHome raises $104 million: Online meat delivery company FreshToHome has raised $104 million (Rs 860 crore), led by Amazon Smbhav Venture Fund, amid a tough funding environment for late-stage startups. Existing investors including Iron Pillar, Investcorp, Investment Corporation of Dubai, Ascent Capital and others also participated in the funding round. New investors include E20 Investment Ltd, Mountshan Judi Ventures and Dallah Albaraka.