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Indian startups have raised about $7 billion this year, according to market intelligence platform Tracxn, down from about $25 billion in 2022 and $37 billion in 2021
High - flying venture investor in India managing C of zillion of dollars are tempering expected value , making former - stage startup bets that in good - character scenarios they trust will yield 3 - 5x invested capital .
Several leading India investor , including Peak XV Partners , Elevation Capital , Lightspeed , Nexus and Accel , have raised $ 500 million - plus in the past two yr , hearten by earlier home run and immense mart potential difference .
However , the die hard humor has budge this year . Investors are increasingly cautioning that they are struggling to discern fund - returning opportunities — their latest headache in the earth ’s most thickly settled body politic . ( A VC with a latterly raised fund below $ 250 million asserted that investment firms wielding $ 500 million or more in capital reserve present corking difficulty deploy those assets productively . )
VC firms generally make between 20 to 30 investments per fund , wager on a choice few startups that can potentially generate oversize riposte to compensate for other going . These firms aim to have two - three of their portfolio companies drive the absolute majority of a fund ’s capital amplification . This strategy of pursuing in high spirits - risk , high - reinforcement deals is especially coarse among early - stage investor who allocate most of their fund capital into young startup in hopes of catch in early on the next self-aggrandising thing .
Theglut of capitalhas contribute India investors to turn abnormally conservative and choosy , founders and investor said . business firm are scrutinizing deals at Series A and vitamin B complex stages for up to six months now , said an investment banker , when such deals once took far less diligence . India ’s sovereign stock has been evaluating an investment in agritech startup WayCool for more than six months at this point , allot to two masses familiar with the issue . play inauguration Loco has also arrest talks with investors to raise about $ 80 million , but more than six months later no deal has materialized .
Bessemer Venture Partners ’ India squad has ink just one new nett quite a little this year , according to people conversant with the matter . One investor remarked that Bessemer is taking months and month in due industriousness and maintaining a high point of skepticism .
Anant Vidur Puri , a partner at Bessemer Venture Partner , confirmed the firm has only done one net new investment in India this twelvemonth , pronounce the fund is “ roadmap pore ” that looks to construct a concentrated portfolio of gamy - timbre investment and often wish to duplicate down on existing backings .
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“ We are also stage agnostic so can add up in at Seed , Series A , B or coulomb and look to retain to back our investment over stage , consistent with the saturated portfolio strategy . Some years we do 6 - 7 unexampled deals and some years we do 0 as well which could depend on when we see attractive and compelling investments in the market , but on an norm we do n’t do more than a handful of new investiture each yr , ” he told me in a text edition substance .
Mirroring the sluggish investment pace in startup ecosystem globally , Native American startups have secured just about $ 7 billion in cap in 2023 , fit in to market intelligence agency platform Tracxn , down from about $ 25 billion in 2022 and $ 37 billion in 2021 . In fact , it ’s the lowest infiveseven years , even as Tracxn said five . ( Only two Indian startups — Zepto — and InCred — enter the unicorn golf club this year . )
Late - stage financial support experienced the steepest decline , plummet over 73 % twelvemonth - over - yr . Moreover , the number of mega - rounds above $ 100 million totaled just 17 for the year , a 69 % drop-off compared to 2021 .
Some investors said they are taking more precautions because of the dwindling value of many of the top Indian startups , something they say has forced them to reconstruct their marketplace dissertation for India .
Prosus recently slashed the evaluation of Byju ’s tobelow $ 3 billion . ( Byju ’s , which has produce over $ 5 billion to date , was assess at $ 22 billion early last year . ) Pharmeasy , once appraise at $ 5.4 billion , recentlyraised working capital at a 90 % discount . Vanguard has trim down the rating of drive - herald hulk Ola by more than 60 % . Food delivery giant Swiggy , merchandiser payments platform Pine Labs , and SaaS Gupshup have all also face write - downs this twelvemonth . Reliance and Google - backed Dunzo , which has raised more than $ 500 million , isstruggling to make payroll department , and BNPL startup ZestMoney , which enhance over $ 130 million , isshutting down .
India - focused investor are also progressively growing bearish on Southeast Asia . In late years , firms like Peak XV and Lightspeed expanded into the part , backing many other - leg startups , some of which became freehanded winners .
However , some large investor now harbor apprehensions , saying too much capital chases too few practicable Southeast Asia deals , billow valuations and diminishing potential returns . ( In a late interview , Peak XV tell it remains very bullish on Southeast Asia . )
Investors also question whether they have overestimated India ’s SaaS chance . “ Everyone underwrote product risk , companies were able-bodied to build products . No one has been capable to sell / graduated table gross beyond a meaningful point , ” a U.S.-based early - stage India investor sound out , lend that very few companies have been able to founder into American web to trade to U.S. ship’s company .
Dev Khare of Lightspeed Venture Partners Indiasaidthere have been fewer than 100 transaction for Indian enterprise software program startups across seed through growth in 2023 . The securities industry continue very focussed on seed transaction , and the Series A round is the “ chokepoint . ”
“ one C of seed done in India in 2021/2022 are finding it strong to give away into enterprise budgets given muscle contraction in budgets and/or many are me - too’s / lightheaded features , ” he wrote .
