[Weekly funding roundup Aug 12-18] VC inflow lowest ever; drops to single digit

The month of August has turned out to be brutal for the Indian startups as the weekly venture capital funding has dropped to new lows, reaching a single-digit figure.

In the third week of August, Indian startups received venture funding of just $4.5 million across seven deals. This is the lowest figure that the domestic startup ecosystem has ever touched in terms of venture funding. Prior to this, a mere $11 million worth of capital flowed in August first week.

The highest-funded deal during this week was just a $2 million transaction, revealing that Indian startups are in a cold grip of the funding winter, and the situation is unlikely to change anytime soon.

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The real boost will only come through large deals with transactions in the range of $100 million and above. This year, such large investments have been few and far between, with the average large deals in the range of $30-50 million.

The only segment that continues to attract a significant amount of money from the VC community is that of generative artificial intelligence (GenAI) startups. Investor interest is very visible, especially in the United States. However, such startups are very few in India.

Industry observers believe that the present funding environment is likely to persist right through the year and any hope of a revival in terms of venture capital inflow is likely to happen in 2024.

Any uptick in VC funding will only happen once large deals start to flow. However, here lies the challenge as some believe startups with large valuations, especially unicorns worth $1 billion and above, will not be in favour of raising money at a lower valuation.

However, in the US, such startups are already raising money at a much lower valuation. Probably, it is a matter of time that Indian startups will follow suit.