The snow is melting, signalling the arrival of a funding spring. The upward trajectory of VC funding, in H1 of the current year, is a sizeable 45% increase from the H2 of 2o23.
There is palpable optimism and there is caution, as the Indian startup funding ecosystem after having showcased resilience leaps towards resurgence. What better time than this to hear it straight from those who are busy witnessing the seismic shifts in the Indian startup ecosystem and recalibrating their strategies to reinvent the Indian startup funding story? Where are those who are fundamental to the early-stage startup story shifting their focus, what sectors are they prioritising, and what essential behaviour changes have they adopted?
Join Prayank Swaroop, Partner at Accel; Harsha Kumar, Partner at Lightspeed India Partners Advisors; Amit Somani, Managing Partner, Prime Ventures; and Anand Datta, Partner, Nexus Venture Partners as they dissect funding challenges, decode investor sentiments, and share forward-looking solutions at the panel discussion titled ‘Surge in Investor Interest: Vision and Outlook of the Indian VC Ecosystem Beyond Hype and Uncertainty’. This introductory panel, which will be moderated by Manu P Toms, Senior editor at Economic Times, will see these leaders from the VC ecosystem set the tone for the revamped and repurposed ET Soonicorns Summit 2024—a premier tech-startup initiative by The Economic Times on its return to Bengaluru on September 20, 2024. The theme for its third edition of the summit—the first-ever ticketed version—is ‘From Resilience to Resurgence’ with its core messaging giving an urgent call to Indian startups to ‘Recalibrate. Rebound. Reinvent’.
Having witnessed the blossoming of a startup from the stage of an idea, these VCs have many gripping stories to share with the ecosystem. Together, they are set to demystify the emerging trends and ongoing funding challenges and outline the funding vision ahead, while delving into the funding outlook as the landscape shifts towards a promising future.
The summit aims to outline the future for Indian startups, with goal-oriented discussions designed to identify the loopholes, devise strategies to minimise the damage they tend to inflict and hand-hold the ecosystem to navigate for a fruitful funding spring as and when it arrives.
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The trends and the roadmap
The challenges that 2023 posed for the Indian startup ecosystem have matured the players, and the VC landscape has witnessed a seismic shift, fostering hope for 2024 and beyond as the current year’s funding is expected to surpass the $10.8 billion figure of 2023.
As the investors are reshaping their investment strategies, the startups are focused on triggering a spike in profitability, while integrating emergent themes, including Artificial Intelligence (AI) and sustainability into their armoury. The shifting focus and strategic recalibrations in the funding ecosystem through 2023-24 provide a peek into investor behaviour.
There has been a democratisation of investments in terms of convergence between Venture Capital (VC) and Private Equity (PE). The PEs focussed on fewer, but high-value, transactions in a deviation from their traditional approach of focusing on larger deals.
On the contrary, VCs recalibrated their focus on smaller, early-stage deals with an aim to nurture ventures with potential for tremendous growth and be in a position to capitalise on the next wave of innovative disruptions. The early-stage category recorded 491 deals in H1 of 2024, way higher than any other category where the number of deals remains well below 100.
As foreign VCs retreat, domestic VCs have increasingly targeted sectors like sustainability and gaming even as consumer tech, fintech, and software and SaaS have remained dominant receiving more than 60% of the funding. A slow shift towards generative AI, healthcare, and electric mobility is also something that should be watched closely.
The trends in funding are expected to continue down the same path, as the funding spring arrives, and the outlook thus emerging will provide a better understanding to both investors and the startups to navigate the landscape intelligently.
The funding winter, in hindsight
Even the deal volume as well as the average deal size took a beating during the funding winter–with the number of deals falling by around 45%, from 1161 in 2022 to 880 in 2023, and the average deal size shrinking by about 30% from $16 million to $11 million.
What led to this harsh funding winter? A global caution on risk capital, higher rates of interest, inflationary pressures, and softening global consumption, coupled with raging wars and a challenging geopolitical situation created significant uncertainties in the minds of the investors.
The silver lining, however, was that despite the challenging environment for the startup ecosystem India surpassed every other country–except the US, the UK, and China–in terms of tech-funding. India was the second largest destination for VC and growth funding in the Asia-Pacific, with sectors such as consumer tech, fintech, and Software-as-a-service (SaaS) continuing to attract significant investments.
So far so good
Funding continues to improve for the Indian startups. The 45% increase in VC funding in the first half of 2024, compared to the second half of 2023, needs to be looked at through the prism of the long funding winter wherein there was a 66% decline in the second half of 2022.
In an important benchmark for the ecosystem, the funding surpassed $1 billion in May and June. The next six months are going to be crucial for the VC ecosystem in India, with startups having their fingers crossed, and the investors moving ahead with cautious optimism.
With the successful past editions, the summit has taken centre stage as a definitive platform for chalking out result-oriented strategies for Indian startups and providing them with a clearer outlook of the future. Apart from dissecting the macro trends and micro vision, this year’s summit will empower the ecosystem with lessons from a rather cold funding winter, enabling them to enter an era of subsequent resilience focused on funding ease.
This is just an overlook into the future. There will be this and much more on the table to be discussed at the ET Soonicorns Summit 2024. Do not miss the opportunity to collaborate, network, and foster fresh ties with industry leaders even as they chalk a roadmap for you to follow and take your startup where it ought to be.
Register early, for this is an opportunity to learn from changemakers and industry leaders, understand the challenges, and find sustainable strategies to navigate the funding conundrum beyond the hype and uncertainty.
To learn more about the ET Soonicorns Summit, visit the .
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(This article is generated and published by the ET Spotlight team. You can get in touch with them at [email protected])