[Weekly funding roundup Oct 28-Nov 3] Venture capital inflow sees steep fall

After a quite positive October, Indian startups struggled to raise funds in the first week of November. Venture capital (VC) funding this week came sliding down for the first week largely due to the absence of large deals.

The first week of November saw total venture funding of $64 million spread across 31 deals, with early-stage transactions garnering the majority share. In contrast, the previous week saw $456 million in VC funding.

This steep decline in weekly funding should not come as a surprise following October when the total VC funding had touched $1.3 billion. However, there were no expectations that the trend would continue into November.

Given the current global macroeconomic challenges, it is safe to assume that the Indian startup ecosystem is unlikely to fetch a steady flow of VC money in the next three months at least, prompting startups to focus on operating a sustainable business with a goal of profitability.

This was evident in the latest quarterly financial results of companies like Zomato and Freshworks. In addition, the initial public offering (IPO) of Honasa Consumer will be kind of a litmus test for the startup ecosystem on how the Indian stock markets react to these kinds of companies.

The last two months of 2023 may not see any major increase in VC inflow, and the year may end with a 50% decline in startup funding compared to 2022.

Key transactions

Spacetech startup Skyroot Aerospace raised $27.5 million led by Temasek.

Healthtech startup Sugar.fit raised $11 million from MassMutual Ventures, Cure.fit, Tanglin Venture Partners, and Endiya Partners.

Fibmold, a startup focused on sustainable packaging, raised $10 million led by Omnivore and Accel.