Startup Funding Hits 5-Year Low in January 2024 as Funding Taps Run Dry

Despite high hopes among startup founders at the beginning of 2024, the funding landscape remained bleak, reaching its lowest point in five years in January.

Indian startups secured a mere $512 million in funding during the first month of the year, marking a steep 47% year-on-year decline. The number of deals also plummeted to 68 from 81 deals recorded the previous year.

Notably, there were no mega deals signed in January, compared to one in January 2023. This downturn in funding was stark when compared to the $4.5 billion raised by Indian startups in 196 deals in January 2022.

The funding downturn was also evident when comparing figures with the preceding month, as startup funding exceeded $1 billion in December 2023 with 76 deals.

Fintech startups continued to dominate

Despite the overall decline, fintech startups continued to dominate the funding landscape, securing $166 million, which accounted for a third of the total funding raised in January. The sector also witnessed the highest number of funding deals.

Among the notable funding rounds, Hyderabad-based NBFC Vivifi India raised $75 million, while Jaipur-based Namdev Finvest secured $15 million as part of its Series B funding round.

The month also saw the birth of India’s 113th unicorn, Krutrim, founded by Ola’s Bhavish Aggarwal. Krutrim became India’s first AI unicorn after securing $50 million at a valuation of $1 billion, further boosting funding in the deeptech sector, which secured $67 million, making it the second most-funded sector in the month.

The third-largest funding round in January was secured by QSR startup Wow! Momo, with Malaysian Sovereign Fund Khazanah and OAKS Asset Management investing $42 million.

E-commerce in downward trend

However, the e-commerce sector continued its downward trend, raising only $45 million across 12 deals in January, compared to $2.6 billion raised by Indian ecommerce startups in 2023.

In terms of startup hubs, Hyderabad surpassed Delhi NCR to claim the second spot, securing $82 million in total funding, primarily due to Vivifi India’s funding. Bengaluru retained its top spot, with Krutrim being a significant contributor.

Late-stage startups bore the brunt of the funding decline, with funding plummeting 76% year-on-year to $176 million. Seed-stage funding also saw a 64% decline, while funding for growth-stage startups improved by 35% year-on-year to $225 million.