VC funding into Indian startups for August declines 64% YoY

The month of August saw venture capital funding into Indian startups continuing to fall, and the only saving grace was Zepto's $200 million deal.

VC funding into Indian startups for August declines 64% YoY

Friday September 01, 2023,

3 min Read

Venture capital (VC) funding into Indian startups continues to remain abysmal as the month of August saw a 64% decline compared to the same period a year ago as large value transactions continue to remain elusive.

The total VC funding for August stood at $396 million—one of the lowest in the last one year. In comparison, the number stood at $1 billion in August 2022.

On a month-on-month basis, VC funding declined by 25% as the figure for the month of July stood at $529 million. This is the fourth time in 2023 that total VC funding on a monthly basis has come in below $1 billion.


The first eight months of 2023 received a total funding of $7.2 billion and it looks unlikely that the Indian startup ecosystem will reach anywhere close to $24 billion recorded in 2022.

In fact, the $200 million transaction of Zepto proved to be the saving grace in August 2023. The online grocery delivery startup accounted for 50% of the total venture funding raised during the month.

Indian startups also managed to receive VC funding in August, but they were certainly not encouraging as they raised just $4.5 million across seven deals.

This reveals the challenges faced by the Indian startup ecosystem which most probably will remain so for the rest of the year.


In terms of stages of funding, the late-stage category was the highest at $200 million, but this was just from the single transaction of Zepto. The early and growth categories of funding received $98 million each.

The one trend that has been very visible right from the second half of 2022 and continues to be strong is the volume of activity in the early stage funding of startups. The number of transactions in this segment continues to remain strong, but the value remains low. The large deal transactions have been very few and these are the ones which provide the boost to the overall VC funding.

August city

In terms of cities that raised the highest funding during the month, Mumbai stood at number one with a total of $207 million fundraise, followed by Delhi-NCR at $64 million, and Bengaluru at $54 million.

The top three destinations of startups generally revolves around these three cities with certain exceptions like Pune or Chennai making their presence occasionally.

There are just four months remaining for the year to end and the Indian startup ecosystem is expected to close 2023 with double digit VC funding from the present level of around $7 billion. This will be much lower compared to 2022 numbers, but this was expected, given the tougher macroeconomic environment.

The single biggest reason for the decline in VC funding has been the hike in interest rates, especially in the US, which has recalibrated its entire investment strategy. This is unlikely to change anytime soon. The only expectation is that 2024 will be a better year.

Edited by Megha Reddy