The 7% drop in startup funding for India in the first nine months of 2024 raises important questions about the evolving startup arena of India. The drop slipped from $8.2 billion in 2023 to $7.6 billion in 2024 (until now). The startup ecosystem is to raise question whether the drop is just a temporary slowdown or it is a sign of more fundamental issues.
However, India’s performance in 2024 still holds up when compared to other major markets. The figure for U.S. startups was $86.2 billion in the same period. The haul seems modest but it becomes clear that India is still in the race for tech-driven economic growth when lined up against China’s $8.2 billion. The sharp decline in the number of funding rounds from 1,579 to 1,036 should serve as a red flag.
One bright spot amidst the decline is the emergence of six new unicorns and 29 IPOs. The achievements indicate that the Indian ecosystem still has the ability to push up success stories and even in a tightening funding environment. The $1 billion round of Zepto stands out as a remarkable example of how selective investors have become.
However, the fintech sector paints a different picture. A steep 39% year-on-year drop in funding highlights the growing caution in areas which were once considered bulletproof. Fintech startups secured just $1.49 billion in 2024. The figure was $2.46 billion in 2023.
The slowdown could be attributed to global macroeconomic factors. Early-stage funding is becoming scarcer and fintech is losing some of its shine. It is the call of the time that India should rethink the ways to attract capital. Well, the remaining months of 2024 will reveal whether the funding dip is a temporary adjustment or the startup community just needs to brace a more significant recalibration.
