[Weekly funding roundup Oct 24-28] Venture debt outpaces equity capital

The last week of October saw an interesting trend emerge from the Indian startup ecosystem. The debt component of the venture capital inflow this week was higher than the equity raised—and this is perhaps the reflection of the times.

The total funding inflow stood at $114 million this week, cutting across 10 deals. This is a steep decline as compared to the previous week when Indian startups raised $419 million. However, one also needs to take into account the Diwali holiday which fell this week.

Interestingly, the venture debt raised by Indian startups stood at $170 million, which was certainly higher than equity funding. The likes of Udaan and Northern Arc Capital raised money through the debt route, underlining the caution in the funding environment which grew over the last couple of months.

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The funding winter has also led to many startups deferring their plans to go public. The stock prices of those startups that went public in 2021 and this year are all trading much below their IPO price.

Given the situation, it is unlikely that there will be any quick turnaround when it comes to venture capital inflow as the macroeconomic environment is not showing any signs of stability to offer confidence to investors.

The remaining months of the year will be even more challenging for startups as this period is prone to seeing a slowdown in the overall business activity.

Key transactions

Consumer electronics company boAt Lifestyle raised $60 million (Rs 500 crore) from Warburg Pincus and Malabar Investment.

Kinara Capital, a fintech lender, raised Rs 200 crore ($24 million) from British International Investment (BII), Nuveen, and the ASN Microkredietfonds.

Devtron, the Gurugram-headquartered open-source DevOps platform, raised $12 million from Insight Partners, Leo Capital, and angel investors.

Cybersecurity startup BluSapphire Cyber Systems raised $9.2 million from Barings India, Dallas Venture Capital, RPG Ventures, and Merisis Venture.