[Weekly funding roundup Sept 6-12] VC inflow continues to remain muted

Venture capital (VC) funding into Indian startups has returned to the familiar territory of muted inflow, with weekly fundraise hovering around the $100-million range. This is primarily due to fewer deals as well as the absence of high-value transactions.

The total funding for the second week of September totalled $146 million across 20 deals. In contrast, the previous week saw VC funding amount at $166 million.

The trend of deflated weekly venture capital funding, in the range of $100 million, started in the month of July, and this continues to date, as per YS Research. In fact, two weeks in August saw VC funding crossing the $300-million range, but after that, it has considerably slipped below this level.

In the current week, the big lift came from the $50 million transaction of Flipspaces.

Now, VC funding is spreading across evenly stages, and this reveals that investors are making selective bets as there is no definite theme of investment.

These trends are largely due to the uncertain macroeconomic environment, which has made investors cautious about investing in Indian startups. In addition, the current trend of investing in AI startups has not really picked up in India, unlike what is happening in the United States.

However, this does not mean that there is no capital available in the system. Each week, VC funds continue to raise capital, but it looks like they are keeping the dry powder for future investments. Also, they are putting money into their existing portfolio of startups that are performing well.

The current environment is likely to persist for some more time till investors get clarity on India negotiating its trade treaty with the United States.

Key transactions

Interior design firm Flipspaces raised $50 million from CE-Invests, Panthera Growth Partners, and SMBC Asia Rising Fund.

Chennai-based Unico Housing Finance raised Rs 120 crore ($13.6 million approx.) from Anicut Capital and UC Impower.

Manufacturing startup Trufrost & Butler raised $7 million from Carpediem Capital.