India's start-up sector is in the depth of a funding winter.
Investment continues to be subdued and the country may not emerge from the chill until much later this year amid a challenging global environment, experts say.
Karteek Pulapaka, co-founder and partner at Java Capital, a Bengaluru-based fund focused on seed-stage entities, says there has been a "marked slowdown in the pace of deal making in the market”.
“The global macroeconomic and geopolitical headwinds, inflation and war in Ukraine, are truly to blame for the slowdown in funding,” he says.
Mr Pulapaka anticipates “a possible recovery in the last quarter of this calendar year, if we are to take an optimistic view”.
Figures from GlobalData show that a total of 87 venture capital deals worth $696.2 million were announced in India during January this year. This marked a decline of 13.9 per cent and 23.1 per cent by volume and value, respectively, on the previous month, when India saw 101 venture capital deals worth $905 million, the data shows.
“India has always been a hotbed for venture capital funding activity,” according to analysts at GlobalData. “However, the new year has brought with it a funding winter that has been continuing to take a toll on investor sentiments.”
Aurojyoti Bose, lead analyst at GlobalData says the downturn is due to “macroeconomic challenges, recession fears and concerns around start-up valuations”.
Over the past decade, India's start-up sector has boomed with the rise of technology to become an increasingly critical part of the country's economy.
Indian government data shows that there are more than 80,000 start-ups registered in the country, and it values this start-up ecosystem at more than 3 trillion rupees ($36 billion).
Some of India's biggest startups include digital payments firm Paytm, which went for a public listing in 2021, food delivery app Zomato, which also listed in 2021, and ride hailing app Ola.
With a population of about 1.4 billion, rising incomes and expanding internet use have over the years made Indian start-ups attractive for local and international investors.
Funding has flowed in from angel investors, private equity companies and venture capital funds.
Global start-up data platform Tracxn's research shows that more than 80 per cent of the top ten investors in seed-stage rounds are from India, while the top ten investors in early and late-stage rounds are dominated by foreign investors, primarily from the US.
Some of the largest investors from the US in India's start-ups include Sequoia Capital, Accel, and Tiger Global.
As central banks raise interest rates global after more than decade at near zero funding is on the decline.
The funding environment in India experienced a sharp downward trend last year, following a bumper year for fundraising by start-ups in the country in 2021.
The acceleration of digitalisation trends due to the coronavirus pandemic helped to boost investor interest then. In addition, a record 44 start-ups in India in 2021 became “unicorns”, which refers to new ventures with a value of more than $1 billion.
But the backdrop turned cloudy in 2022 because of Russia's war in Ukraine and the spillover effects of the conflict on the global economy. This was accompanied by the US Federal Reserve raising interest rates, leading to capital flowing away from emerging markets.
This funding winter is not showing signs of thawing yet, analysts say.
The volume of funding deals for India registered a year-on-year decline of 62.5 per cent in January 2023, while the value of deals fell by 80.3 per cent, GlobalData's figures reveal.
“The current declining trends in funding are expected to continue in 2023 in view of concerns about a global recession and other geopolitical factors,” says Neha Singh, co-founder of Tracxn.
“Despite minor upticks in October and November 2022, the overall trend has been downward with the first three months of this year being no exception.”
This is taking a toll on India's start-ups.
“Business owners have cut back on their financial outlays, shut down losses-making ventures, and started to carefully consider unit economics,” says Ms Singh. “Also, as a result, we witnessed extensive, widespread layoffs in 2022 and the first two months of this year.”
Local media reports in India say that several high-profile start-ups in the country, ranging from food delivery apps to educational technology companies have been laying off hundreds of employees each.
“Although venture capital funds are sitting on a lot of uninvested capital, investments are still expected to be slow as investors exercise more caution while taking investment decisions,” says Ms Singh.
“Their investment strategies have changed dramatically and it is expected that funding will be directed toward start-ups with a clear roadmap to profitability and strong fundamentals.”
“Investors will look for qualities like scalability, growth potential, and the ability to reduce cash burns among start-ups, and such businesses are expected to attract ample investments going forward,” she says.
There are still some bright spots in India.
Ms Singh points out that despite the overall downward trend in funding since the start of 2023, there have been six $100 million funding rounds.
This “indicates that funding will be consolidated to more established start-ups with strong fundamentals”, she says.
Indian digital payments company PhonePe, which is backed by US retail giant Walmart, last month raised $100 million from Tiger Global, California-based Ribbit Capital, and Chennai-based TVS Capital Funds, with the funding round valuing it at $12 billion. That brought the total investment it has raised this year to $450 million, after it secured $350 million from General Atlantic in January.
PhonePe said it expects “further investments from leading global, as well as prominent high net worth Indian investors in due course”.
“We are privileged to have a great set of leading global investors, both existing and new, who believe in our mission of building massive technology platforms to bring at-scale financial and digital inclusion in India,” said Sameer Nigam, chief executive and founder of PhonePe, as the fund raising was announced.
Also, last month, Indian insurance technology start-up InsuranceDekho raised $150 million in a round made up of equity and debt, with Goldman Sachs Asset Management, TVS Capital Funds, Investcorp, and Leapfrog Investments participating.
With a large, young population to tap, rising smartphone ownership, and an economy that is faring relatively well compared to many economies globally, analysts say that the financial technology segment is outperforming other sectors.
Sagar Agarvwal, the co-founder and managing director of Beams Fintech Fund, believes things are looking promising for fundraising in the FinTech sector in India after a few challenging quarters during which inflation has made capital more expensive for both investors and companies.
“We have seen some improvement since the last quarter in our own deal pipeline, and we are glad that companies took their time to focus on unit economics before raising their next round of growth capital,” says Mr Agarvwal.
“India is the third largest start-up ecosystem in the world, and we continue to stay bullish on high quality companies that are solving large complex problems and have a clear path to profitability.”
However, Java Capital’s Mr Pulapaka warns that, for the broader start-up ecosystem in India, “a prolonged slowdown in funding may discourage first time founders from starting up, and founders will have to settle for lower mark-ups to continue raising this year”.
But he says India's economic growth story is still intact and he sees “this slowdown as a speed bump rather than a point of no return”.
Anil Joshi, the managing partner at Unicorn India Ventures, which is focused on the tech sector, remains upbeat, given the country's large consumer base and other fundamentals. He says his venture capital fund is still seeing strong investor interest despite the funding winter.
“We haven’t seen any drop in interest from investors for Indian companies,” says Mr Joshi.
“Overall, India will keep attracting investors' interest for the whole of the decade considering the way India is progressing.”
Florence and the Machine – High as Hope
Three stars
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
How being social media savvy can improve your well being
Next time when procastinating online remember that you can save thousands on paying for a personal trainer and a gym membership simply by watching YouTube videos and keeping up with the latest health tips and trends.
As social media apps are becoming more and more consumed by health experts and nutritionists who are using it to awareness and encourage patients to engage in physical activity.
Elizabeth Watson, a personal trainer from Stay Fit gym in Abu Dhabi suggests that “individuals can use social media as a means of keeping fit, there are a lot of great exercises you can do and train from experts at home just by watching videos on YouTube”.
Norlyn Torrena, a clinical nutritionist from Burjeel Hospital advises her clients to be more technologically active “most of my clients are so engaged with their phones that I advise them to download applications that offer health related services”.
Torrena said that “most people believe that dieting and keeping fit is boring”.
However, by using social media apps keeping fit means that people are “modern and are kept up to date with the latest heath tips and trends”.
“It can be a guide to a healthy lifestyle and exercise if used in the correct way, so I really encourage my clients to download health applications” said Mrs Torrena.
People can also connect with each other and exchange “tips and notes, it’s extremely healthy and fun”.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
2.0
Director: S Shankar
Producer: Lyca Productions; presented by Dharma Films
Cast: Rajnikanth, Akshay Kumar, Amy Jackson, Sudhanshu Pandey
Rating: 3.5/5 stars
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
Read more about the coronavirus
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 201hp at 5,200rpm
Torque: 320Nm at 1,750-4,000rpm
Transmission: 6-speed auto
Fuel consumption: 8.7L/100km
Price: Dh133,900
On sale: now
COMPANY%20PROFILE
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MATCH INFO
Chelsea 4 (Mount 18',Werner 44', Hudson-Odoi 49', Havertz 85')
Morecambe 0
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%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.0-litre%204cyl%20turbo%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E261hp%20at%205%2C500rpm%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E400Nm%20at%201%2C750-4%2C000rpm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E7-speed%20dual-clutch%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E10.5L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh129%2C999%20(VX%20Luxury)%3B%20from%20Dh149%2C999%20(VX%20Black%20Gold)%3C%2Fp%3E%0A
UAE currency: the story behind the money in your pockets
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
The five pillars of Islam
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
RESULTS
6pm: Mazrat Al Ruwayah – Group 2 (PA) $40,000 (Dirt) 1,600m
Winner: AF Alajaj, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
6.35pm: Race of Future – Handicap (TB) $80,000 (Turf) 2,410m
Winner: Global Storm, William Buick, Charlie Appleby
7.10pm: UAE 2000 Guineas – Group 3 (TB) $150,000 (D) 1,600m
Winner: Azure Coast, Antonio Fresu, Pavel Vashchenko
7.45pm: Business Bay Challenge – Listed (TB) $100,000 (T) 1,400m
Winner: Storm Damage, Patrick Cosgrave, Saeed bin Suroor
20.20pm: Curlin Stakes – Listed (TB) $100,000 (D) 2,000m
Winner: Appreciated, Fernando Jara, Doug O’Neill
8.55pm: Singspiel Stakes – Group 2 (TB) $180,000 (T) 1,800m
Winner: Lord Glitters, Daniel Tudhope, David O'Meara
9.30pm: Al Shindagha Sprint – Group 3 (TB) $150,000 (D) 1,200m
Winner: Meraas, Antonio Fresu, Musabah Al Muhairi
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
Washmen Profile
Date Started: May 2015
Founders: Rami Shaar and Jad Halaoui
Based: Dubai, UAE
Sector: Laundry
Employees: 170
Funding: about $8m
Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures
MATCH INFO
New Zealand 176-8 (20 ovs)
England 155 (19.5 ovs)
New Zealand win by 21 runs
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Roll of honour 2019-2020
Dubai Rugby Sevens
Winners: Dubai Hurricanes
Runners up: Bahrain
West Asia Premiership
Winners: Bahrain
Runners up: UAE Premiership
UAE Premiership
}Winners: Dubai Exiles
Runners up: Dubai Hurricanes
UAE Division One
Winners: Abu Dhabi Saracens
Runners up: Dubai Hurricanes II
UAE Division Two
Winners: Barrelhouse
Runners up: RAK Rugby
The specs: Fenyr SuperSport
Price, base: Dh5.1 million
Engine: 3.8-litre twin-turbo flat-six
Transmission: Seven-speed automatic
Power: 800hp @ 7,100pm
Torque: 980Nm @ 4,000rpm
Fuel economy, combined: 13.5L / 100km
COMPANY%20PROFILE
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