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Indian Startup Funding Plunges to 5-Year Low in January 2024

ndian startup funding hits a five-year low in January 2024, with only $512 million raised, marking a significant decline from previous years. Fintech startups remain resilient, while the ecommerce sector struggles amidst broader funding challenges.

Indian startup funding faced a significant downturn in January 2024, hitting a five-year low as total funding plummeted to $512 million. This marks a 47% year-on-year decline, with only 68 deals sealed compared to 81 deals in the same period last year.

The absence of mega deals, which characterized January 2023 with one notable deal, exacerbated the funding crisis this year. The dismal funding figure represents just 11% of the $4.5 billion raised by Indian startups in January 2022.

Despite the broader funding slump, fintech startups remained resilient, securing $166 million and accounting for a third of the total funding. Notable contributions came from Hyderabad-based NBFC Vivifi India, which raised $75 million, and Jaipur's Namdev Finvest, which secured $15 million in Series B funding.

Krutrim, a deeptech startup founded by Ola's Bhavish Aggarwal, emerged as India's 113th unicorn, raising $50 million at a $1 billion valuation, bolstering funding for the deeptech sector, which garnered $67 million.

In another significant development, QSR startup Wow! Momo received $42 million in funding from Malaysian Sovereign Fund Khazanah and OAKS Asset Management.

However, the ecommerce sector continued its downward trend, securing only $45 million across 12 deals in January. This contrasts sharply with the $2.6 billion raised by Indian ecommerce startups in 2023, marking a 32% decline from 2022.

Hyderabad surpassed Delhi NCR as the second-largest startup hub, securing $82 million in funding, largely driven by Vivifi India's $75 million raise. Meanwhile, Bengaluru maintained its dominance as the top startup hub, with notable contributions from startups like Krutrim.

The decline in funding extended to seed and late-stage startups, with late-stage startups experiencing the most significant impact, suffering a 76% year-on-year decrease to $176 million. Seed-stage funding also plummeted by 64% to $38 million. However, growth-stage startups saw a 35% increase in funding, reaching $225 million compared to $159 million last year.

Overall, the funding landscape in January 2024 reflects a challenging environment for Indian startups, with uncertainties looming amid the broader economic backdrop.