VC funding for first 9 months of 2024 rises 30% YoY

Venture capital (VC) funding into Indian startups seems to have come out of the grip of funding winter as the first nine months of 2024 saw a nearly 30% year-on-year increase in fund inflow compared to a similar period a year ago.

The total VC funding from January to September 2024 totalled $10.5 billion, compared with $8.1 billion raised in the first nine months of 2023, according to YourStory Research. However, the Indian startup ecosystem fell short of the bull run in 2022 when it pulled $19.7 billion.

The upsurge in VC funding was also due to an increase in the number of deals. The total number of deals for the first nine months of 2024 stood at 998, compared with 811 in the year-ago period.

Going by the trends, the total funding in 2024 is likely to surpass the $10.8 billion raised last year, setting the stage for a firm upswing in 2025.

The capital inflow has already been trending positive this year. Since May, the fund inflow has consistently crossed the $1 billion mark. In September alone, the total VC funding stood at $1.386 billion, compared with $857 million raised in September 2023, showing a 62% annual increase.

However, on a month-on-month comparison, i.e., August 2024 was an outlier with a 19% YoY drop.

These trends certainly bring a sense of relief to the Indian startup ecosystem and this is evident with the late-stage funding category showing the strongest traction and giving the biggest funding boost. This year, quick commerce unicorn Zepto raised over $1 billion.

In the July-September quarter, the late-stage category fetched the highest capital at $3.892 billion, followed by the early-stage category at $2.850 billion. The venture debt category of funding saw an inflow of $1.370 billion.

The fintech sector raised the highest funding in the third quarter of 2024, totalling $2.493 billion, followed by hyperlocal at $1.015 billion and healthtech at $760 million. The fintech segment has consistently maintained the top spot in terms of VC funding.

In terms of the cities, Bengaluru topped the list at $3.139 billion, followed by Delhi-NCR at $3.016 billion and Mumbai at $2.7 billion in Q3 FY25. Though these three metros continue to be the startup hubs, other locations such as Chennai, Hyderabad, and Pune are showing traction.

The overall signs are certainly positive for the Indian startup ecosystem and the number of startups going onto the route of a public listing through an initial public offering (IPO) are definite signs of maturity. There is now optimism in terms of VC funding for the year 2025.