Immediately after COVID cases came down and the stress of the pandemic reduced, investments started to flow in the Indian Startup sector and in the last few months the winter funding has started setting in. Venture capitalists, private equities, and strategic investors feel that winter funding will be beneficial for startups in order to grow faster in the ecosystem. The winter funding will not last long however it will give a boost to the startups.
A study by Tracxn stated that quarter-on-quarter funding hit record numbers in Q3 of 2021 which reached $14.8 Bn. This steadied from there on until Q2 of 2022, which is when the dip started to happen. Recent reports and data suggest how VC funding in India hit a 21-month low in the July-September quarter, with 387 deals bringing in merely $2.8 Bn, compared to the $9.8 Bn raised in 525 deals at the same time in 2021.
The startup ecosystem is considering hitting the reset button which has become essential at this stage as not every startup has shown the ability to sustain itself. Currently, India has over 57,000 startups, several businesses, and upcoming entities. The reset will allow investors to reevaluate their decision as to which startup will receive their funding. Cautiousness has seen to be creeping in when it comes to where the funding is flowing.
Founders and entrepreneurs are majorly looking for partners and investors who could also provide them with their expertise as well. Companies that demonstrate strong business models, scalability, market capitalization, and innovative founders will find it easier to be able to raise funding.
