India’s venture capital funding plummets by 79 per cent in H1 2023; fintech and edtech hit hardest

India’s venture capital (VC) landscape experienced a drastic downturn in the first half (H1) of 2023, with investments plunging by an alarming 79 per cent compared with the same period last year. The impact was particularly bad in sectors like fintech, edtech, and enterprise-tech, according to multiple reports.  

According to data from Venture Intelligence, total investments in H1 2023 amounted to $3.8 billion, a stark contrast to the robust $18.4 billion secured the previous year. The number of deals, meanwhile, plummeted to a mere 293, a 60 per cent decrease from 727 seen the previous year.  

In the early-stage segment, funding value declined by 65 per cent to $624 million, compared with $1.8 billion in 2022, while for growth-stage companies it was $342 million, a 43 per cent decrease from the previous year’s $602 million.  

Growth private equity (PE) investments witnessed the steepest fall. The total investment in this segment amounted to $1.6 billion, an 84 per cent plunge from the previous year’s $10.5 billion. Venture Intelligence defines Growth PE as investments of less than $20 million from Seed to Series D in companies over 10 years old, as well as institutional investments from Series E to F in companies of the same age.  

Late-stage funding segment also experienced a considerable decline with value falling 78.3 per cent to $1.1 billion in H1 2023 from $5.5 billion.  

As per data platform Tracxn, the decline was seen across sectors with enterprise-tech taking the hardest hit among the most prominent sectors. Companies in this sector raised $671.7 million across 158 deals in the first six months of the year, down 88 per cent from previous year’s $5.5 billion and 96 per cent from the $18 billion raised in 2021.

Fintech, one of the most active venture investing segments over the past few years, saw a decline of 67 per cent, with start-ups raising $1.4 billion in H1 2023 against $4.3 billion in the previous year period. For comparison, the sector had seen investments worth of $17.5 billion in 2021.

Edtech, which is experiencing severe turbulence after the pandemic boom has waned, saw investments decline 52 per cent to just $886.5 million in the first six-month period of the year from $1.8 billion in H1 2022, and 88 per cent drop from $7.4 billion in H1 2021.  

VC investments in the healthtech sector decreased 82 per cent to $139.4 million from $767.7 million while travel and hospitality tech sector saw a decline of 66 per cent to $173 million, from $511.8 million in H1 2022.