VC funding into Indian startups rises by 45% in H1 2024

In the first six months of 2024, venture capital (VC) funding into Indian startups showed all the signs of a steady upward trajectory, as it rose by 45% compared to the preceding six months between July and December 2023.

Indian startups raised a total of $6.4 billion in VC funding in the first six months of 2024. In contrast, they secured $4.4 billion in the second half of 2023, as per YourStory Research.

However, compared with the first six months of 2023, the rise was just 1.5% at $6.3 billion.

Overall, the first half of 2024 has positive bearings after VC funding showed a 66% decline in the second half of 2022. This needs to be seen in the context of the long funding winter, which engulfed the Indian startup ecosystem after the bullish period of 2021 and the first half of 2022.

In fact, in the first six months of 2024, month-on-month VC funding has been on a steady rise. The last two months—May and June—saw VC funding crossing $1 billion, an important benchmark for the ecosystem.

These developments could see the startup ecosystem ending stronger in 2024 and probably surpass the $10.8 billion figure in 2023.

Among the sectors, fintech and ecommerce drove VC funding in H1 2024, where the fintech segment received a total of $1.4 billion while the ecommerce segment bagged $1.1 billion. Two other notable segments, direct-to-consumer (D2C) and healthtech, raised $523 million and $504 million, respectively.

The first six months of 2024 saw a total of 665 deals, but only eight deals exceeded the total value of $100 million.

Topping this list was quick commerce unicorn Zepto, which raised $665 million, followed by social commerce unicorn Meesho ($275 million), and omnichannel eyewear retailer Lenskart ($200 million).

Startups like Pharmeasy, Capillary Technologies, PocketFM, Nephroplus, and Shadowfax also raised VC funding exceeding $100 million.

Further, fewer large-value deals are the primary reason for VC funding continuing to remain at a modest level. Given the present funding winter scenario, such high-value deals have become few and far.

This is reflected in the stage-wise funding, where the late-stage category saw $2.4 billion, while it was $1.4 billion in the growth segment. The early-stage funding category witnessed $1.6 billion, and the debt segment saw $870 million.

However, the early-stage category saw the highest deals at 492 in H1 2024. In all the other categories, the number was well below 100—a trend seen over the last two years, where the early-stage category sees the highest activity but a lower funding amount.

In terms of cities, Bengaluru raised the highest VC funding, followed by Mumbai and Delhi-NCR. Although it has been the general pecking order, startup hotspots like Chennai, Pune, and Hyderabad also saw VC funding activities.

The next six months of the year will be crucial for the Indian startup ecosystem as it needs to keep up the momentum if the VC funding number has to surpass the figure of 2023.