Indian startups have seen a significant drop in funding in the first five months of 2023, receiving only a fifth of the investments they did during the same period last year.

What Happened? Per a MoneyControl report, data from Venture Intelligence reveals that venture capital and private equity funding fell by 79% to $3.3 billion (₹27,164 crore) from last year’s $15.7 billion (₹1,29,232 crore). Furthermore, the number of funding rounds decreased to 247 from 613 in 2022.

May 2023 saw investors take part in around 53 funding rounds, putting in about $948 million (₹7,805 crore). This is a significant decrease from the $1.68 billion (₹13,830 crore) across 108 funding rounds in May 2022. The number of deals saw an even sharper decline, dropping by more than half compared to the same month last year.

There was a slight increase in funding from April to May 2023, from $342 million (₹2,815 crore) across 46 deals, but these figures are still below 2022 levels.

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Investments in growth and late-stage startups also felt the squeeze. From January to May 2023, such startups secured $2.75 billion (₹22,635 crore) across 105 deals, a significant drop from the average of $8.9 billion (₹73,256 crore) across 189 deals in 2022.

Prashanth Prakash, founding partner at Accel, expects an increase in mergers and acquisitions in the coming months, as he predicts a funding drought for late-stage startups lasting up to 10 months.

In the first five months of 2023, 142 early-stage deals brought in $549 million (₹4,520 crore), which is a 54% drop from the average number of deals last year, and a 56% decrease in the amount of funding.

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