Industry experts said the latest data would be for deals that closed a few months ago, as that’s usually the time it takes to officially announce the fundraising. Despite a slight increase in deal activity, tech investors said this did not foresee a sustained recovery. Late-stage funding also continues to come under pressure.
Data showed that after June, when Indian startups raised $2.36 billion, funding activity slowed to around $877 million in July, $981 million in August and $787 million in september. The past two months have seen a gradual recovery, however, with a total fundraising of $1 billion in October.

Separately, data provided by market intelligence platform Tracxn showed that of the top 10 deals in 2022, nine were completed in the first half of the year.
Anand Lunia, founding partner of venture capital firm India Quotient focused on seed and start-up, said: “November deals are those that were done in July-August, and that’s when- there we have also seen a lot of transactions coming our way happening.
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On why there is a slight increase in fundraising activity now, Lunia said, “The reason is that the hangover of 2021 was over on the minds of VCs in January-February. But the founders were mentally in 2021 until June or July of this year. Their valuation expectations remained in the same place.
Rating Reset
A venture capitalist who spoke to ET on condition of anonymity said the founders initially waited for better valuations but eventually signed deals as they began to near the end of their cash trail.
“In the first quarter of 2022, some founders wanted the typical $5 million for 20% seed funding, but investors had become realistic by then. A founder who wasn’t ready to do a $3m deal with us in Feb-March, came back and signed a $1m raise in August,” this person said.

Bengaluru-based Arpit Agarwal, an investor in start-up fund Blume Ventures, said: “The market continues to be slow…There may have been deals that the founders were looking for and made at valuations below the expectations. Many founders managed to get a lot of capital last year and wouldn’t have needed funds in the first half of this year… I don’t see this as a sign of the market coming back yet,” Agarwal added.
Entrepreneurs are still waiting to ride out the funding winter by not choosing to raise a new round. “I would like to avoid fundraising as much as possible in the next six months. Valuations will be boosted even for relatively better companies with healthy economies. I took on a little debt for working capital and it’s better now than taking money through an expensive stock sale,” said the founder of an online food brand.
“The goal is to further strengthen the unit economy and display profitability, which is the new benchmark among private equity investors as well as public market investors,” he added. .
Looking forward
While the upward momentum in funding activity is expected to continue over the coming months, few investors are writing checks for post-Series B rounds, IndiaQuotient’s Lunia said.
“People will wait and watch to see who is really performing and who is surviving before they do more Series B deals. In the second half of next year, Series B, C and D deals will start happening, but in the first half, not much is likely to happen. Overall, the VCs are now only focused on seeds,” Lunia said.
During a panel discussion at the ET Startup Awards in November on the tech industry reset, Flipkart Group Managing Director Kalyan Krishnamurthy said the next 12 to 18 months will see Indian startups navigate turmoil and volatility, with the funding crunch beginning to affect these new-era tech companies by early next year.
Things would improve after that, and companies should focus on surviving this period, he said. “It’s going to be tough next year… I think a lot of people will be going to the market (for fundraising) between April and June next year. That’s probably the moment of truth for us all in the ecosystem,” he said during the discussion.
The previously quoted venture capitalist also said the startup community will suffer more before things start to look up. “As of now, there has been no ecosystem cleanup or fix in India like there has been in the US. All unicorns made in 2021 are still there. So far , the only correction seen was in the form of 10% or 20% layoffs,” he said, adding: “There will be more before things start to improve.
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