Indian startups raise record US$10 bn as of October 2024

India’s growth is fueling positive trends across multiple sectors, unlocking new opportunities.  Indian startups had raised nearly US$ 10 billion in funding as of  October 2024, on track to surpass 2023’s total by the end of the year. Investor confidence is growing, with more large deals and strong IPO activity.

Indian startups had raised nearly US$ 10 billion as of October 2024, positioning them to exceed the US$ 10.5 billion total raised in 2023. This upswing points to renewed confidence in a sector that has faced a prolonged “funding winter.

Data from Tracxn reveals that by October, startups had raised funds in 1,220 rounds, with 18 deals surpassing US$ 100 million—matching the total count of similar large deals recorded in 2023. The rise in US$ 100 million-plus deals hints at a possible end to the sector’s “funding winter.” 

In the same period last year, startups completed 1,837 rounds but raised a smaller total of US$ 8.8 billion as investors favored smaller deals. Funding in 2023 hit a five-year low, down from the record US$ 42 billion in 2021 and US$ 25 billion in 2022. June was 2024’s peak month, with startups securing US$ 1.57 billion across 131 rounds. 

The first half of the year accounted for nearly 70% of all funding rounds and over half of the total capital raised. In the latter half, though the number of rounds declined, deal sizes grew, with startups raising US$ 1.3 billion in both August and September through 94 and 96 rounds, respectively. Notable deals included Zepto’s US$ 340 million Series G, DMI Finance’s US$ 334 million Series E, Physics Wallah’s US$ 210 million Series B, and Whatfix’s US$ 125 million Series E. Investor focus, though, continues to be primarily on the consumer and retail sectors, with considerable attention also given to enterprise applications.

End of ‘funding winter’?

The Indian startup ecosystem is evolving, creating a positive ripple effect across the broader economy. This includes a stronger talent pool, the rise of repeat and younger founders, growing global interest in Indian startups, and India’s improved ability to attract global capital, among other factors.

Key drivers of the ecosystem’s resurgence include increased liquidity from IPOs and public markets, reduced risk aversion among entrepreneurs, a rise in venture capital funding, long-term optimism, and the growth of deep tech and consumer brands. Domestic capital is now fueling startups, signaling a significant shift from reliance on US investors and transforming the venture capital landscape in India.

Interestingly, in 2024, India’s IPO market has experienced impressive growth, with excitement spreading beyond traditional sectors. Startups, particularly in the digital and tech industries, are taking advantage of this momentum, raising considerable capital through Initial Public Offerings (IPOs). The country’s favorable macroeconomic environment has sparked a strong revival in its IPO market, especially with an uptick in public listings from tech startups. 

EY’s Global IPO Trends Q2 2024 report highlights India’s leadership in global IPO activity during the first half of 2024, with the country accounting for more than 27% of worldwide IPOs. While other regions, including Mainland China, saw declines, India saw a significant increase with 38 mainboard IPOs in H1 2024, up from 11 in the same period last year, plus over 100 SME IPOs. The broader rally in Indian equities and positive investor sentiment have yielded substantial returns for those investing in startup IPOs.

To name a few major startups taking up the IPO route- B2B travel portal TBO Tek (which was the first mainboard new-age tech company IPO this year), Online travel aggregator ixigo, coworking startup Awfis, kids-focussed omnichannel startup FirstCry, enterprise tech startup Unicommerce, Ola Electric, insurtech startup Go Digit.

Recently, Swiggy, the well-known food delivery platform and a direct competitor to Zomato, made its much-awaited stock market debut on November 13. The shares were listed at Rs 420 on the National Stock Exchange (NSE), marking a 7.7% premium over the issue price of Rs 390.

In addition, India’s decision to eliminate a time-consuming compliance requirement is expected to accelerate the return of Indian startups based abroad, enabling them to take part in the country’s IPO boom. Several Indian startups that previously established themselves abroad to access capital more easily and benefit from lower tax rates are now planning to return to India from financial hubs like the U.S. and Singapore, attracted by improved IPO opportunities in a country that doesn’t allow dual listings.

As of October 2024,  Razorpay, Pine Labs, and KreditBee are in the final stages of their reverse flip, while Zepto, Eruditus, and InMobi are also looking to complete their mergers in the coming months as they prepare for their IPOs. 

As more Indian companies go public, they will enhance market liquidity, draw investors, and fuel growth. This will bolster the startup ecosystem, support the Indian economy, and position the country as a global market leader.