Green Shoots Visible In Startups Space During H2 On Renewed Activity

Startup ecosystem in India has seen some recovery towards the second half of 2024. Though there is no respite from ongoing funding winter yet, some green shoots emerged towards the end of the year. Indian startups raised $9.2 billion in venture capital (VC) funding in 984 deals during January-October 2024, according to data analytics firm GlobalData. This was an increase of 44.4 per cent in funding value from the year before. During the same period, deal volumes rose 5.8 per cent, indicating a renewed investor confidence.

Last year, around $6.4 billion was raised in the first 10 months across 930 VC deals. Though there is marked im-provement in the flow of funds to startups this year, it still remains a far cry if we compare this to post pandemic years. Moreover, absolute numbers give a wrong idea about the fund raising activity. Because a large portion of funding has gone to established startups. These companies raised capital through late funding rounds. As compared to this, early stage fund-ing has not seen much uptick this year. After a lull in large-sized deals in 2023, established startups like Zepto, Rapido, PhysicsWallah, Mintifi, Atlan, Healthkart and Finova Capital closed mega rounds of more than $100 million this year.

But investors remain wary of putting risk capital in new startups. Experts are of the opinion that investors had burnt their fingers as many startups have closed shops or downsized their operations owing to funding winter. This has led to losses incurred by investors. After such an experience, investors are cautious about taking exposure to startups at an early stage.

Meanwhile, 2024 will also be remembered as a year of many successful listings of startups in Indian bourses. Around 14 startups have already raised capital through IPO so far this year. The total amount raised by these startups through their IPOs is over Rs29,000 crore, which shows the strength of the market. The biggest fund raise through IPO route was accomplished by food delivery platform, Swiggy, which raised Rs11,324 crore and had a strong debut in exchanges. Ola Electric raised Rs6,145 crore from Indian markets, while insurtech company,

Go Digit General Insurance has raised Rs2,614 crore through its IPO. FirstCry, another estab-lished startup, raised Rs2,614 crore and made a successful listing in Indian exchanges. So, 2024 has been a remarkable year in many ways as it gave investors a fair chance to exit their investments. It also indicated that domestic startup ecosystem is coming up age where large number of investors can rely on their business model. This year also saw the pace of firing employees owing to funding winter coming down.

Though overall addition of employees by startups remained subdued in 2024, it is still a better year than 2023 when thousands of em-ployees lost their jobs. As we approach 2025, Indian startup ecosystem is expected to perform better in terms of fund raising and listing. Investors also expect that startups will be more re-sponsible in their approached towards hiring and firing in 2025.