India VC funding jumps 44% to $9.2bn in Jan-Oct; will the recovery continue?

In a sign of increasing investor confidence in India's startup ecosystem, a total of 984 venture capital (VC) funding deals were recorded during January-October 2024, which was a year-on-year (YoY) improvement of 5.8% in deal volume. The total disclosed funding value of these deals jumped by 44.4% YoY to $9.2 billion during the same period, the latest data by U.K.-based data and analytics company GlobalData shows.

Comparatively, a total of 930 VC deals were announced in India during January-October 2023, with the total disclosed funding value of these deals pegged at $6.4 billion. "Investor confidence seems to be reviving as India demonstrates significant improvement in VC funding activity during the year compared to peer countries. In fact, it was among the few key markets that witnessed the improvement in both deal volume and value during January-October 2024," says Aurojyoti Bose, lead analyst, GlobalData.

Tech start-ups have been going through a rough period since 2021 when funding peaked at $39.4 billion. In 2022, the numbers plunged to $11.4 billion and fell further to $8.8 billion in 2023. The start-up ecosystem saw the first signs of recovery in the first half of the year (H1 2024) as funding surged slightly. They raised $5.1 billion in H1 2024 alone, a 7% increase from $4.46 billion in H2 2023, turning around two years of successive decline in funding every six months.

With the continued revival in funding activity, India remains among the top five markets globally for VC funding activity in terms of deal volume as well as value. The country accounted for a 7.1% share of the total number of VC deals announced globally during January-October 2024, whereas its share in terms of total disclosed funding value stood at 4.2%.

Key VC funding deals in India from January to October 2024 include Zepto's $665 million raised in June, followed by an additional $340 million in August. Other significant funding rounds include Meesho securing $300 million, PharmEasy raising $216 million, PhysicsWallah securing $210 million, and Purplle raising $178.4 million.

Investor confidence growing: Stakeholders

As the funding activity gets a boost, India could maintain its status as one of the top global destinations for venture capital. Bose of GlobalData says it reflects the country’s "dynamic entrepreneurial ecosystem and potential for sustained growth.”

Funding winter seems to be on the mend, says Rahul Chandra, MD, Arkam Ventures, which invests in middle-India opportunities across financial services, skilling, food, agriculture, mobility, healthcare and SaaS. "The excitement to back bold ideas is back in some measure, which is promising to grow further. We are seeing some sort of revival in startup activity with many new founders finally jumping in to execute on their ideas."

The emergence of some new areas like the quick commerce ecosystem, manufacturing tech, wealth tech is also being noticed. "Surprisingly edtech seems to be making a shy comeback," says Chandra.

Winnie Shekhar, partner, IndusLaw, believes the trend highlights a robust revival in investor confidence. "This uptick reflects a focus on scalable, tech-driven sectors like AI, climate tech, and consumer tech/retail, fintech, which are capturing global attention. It also underscores India's resilience as a startup hub amid global economic uncertainties."

The current VC funding trend is a culmination of the work that has gone on in the ecosystem for the past couple of years, says Vatsal Kanakiya, CEO of VC firm 100X.VC that invests in early-stage startups. "Founders have built capital-efficient startups that are worthy of consuming capital. LP appetite for the asset class is also back. This has allowed VCs the liberty to open up their purses. Combined with increasing liquidity events for startups, and publicly listed companies like Zomato performing well, we expect this trend to continue, and the capital influx to only increase from here."

Saurabh Bhardwaj, CEO of Bangalore-based cloud startup VergeCloud, also says that the $9.2 billion VC funding so far this year signals continued investor interest. "We raised $3 million in funding, which will help us enhance our cloud platform offerings. We’re committed to contributing to India’s dynamic tech ecosystem."

'Entrepreneurial potential expanding but prudence is needed'

The VC funding milestone shows how investors' trust in India's entrepreneurial potential is expanding, says Ravinder Goyal, co-founder at Erekrut, an HR technology platform. "For companies to succeed in the long run and draw in even more capital, they must keep concentrating on scalability, sustainability, and global outreach."

Shekhar of IndusLaw, however, cautions the upward momentum also calls for "prudence", as deploying funds effectively to sustainable, high-impact ventures will be crucial to sustaining this growth.

Alok Goyal, partner at Stellaris Venture Partners, which just yesterday secured closed its third fund of $300 million, says the availability of capital has also gone up significantly. "India today has a large number of funds across stages and sectors. With a 7-8% per annum real GDP growth, most underlying markets are doubling every 6-7 years."