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Indian Tech Startups See $4.1 Billion Boost in H1 2024: Tracxn Report

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Indian tech startups experienced a significant funding surge in the first half of 2024, raising $4.1 billion, a notable 4% increase compared to the second half of 2023, according to a recent report by Tracxn.

India Holds Strong in Global Tech Funding

Despite challenges, India continues to secure its position as a major player in the global tech startup landscape, ranking as the fourth-highest funded country. The United States leads the pack, followed by the UK and China.

A Closer Look at Funding Trends

The Tracxn report, titled “India Tech Semi-Annual Funding Report H1 2024,” offers detailed insights into the evolving funding trends, sector performances, and significant developments within the Indian tech sector during this period.

  1. Seed-Stage Funding:
    • Increased to $455 million, up 6.5% from H2 2023.
    • Down 17.3% compared to H1 2023.
  2. Early-Stage Startups:
    • Steady at $1.3 billion, consistent with H2 2023.
    • 28% lower than H1 2023.
  3. Late-Stage Funding:
    • Rose to $2.4 billion, marking a 3.8% increase from H2 2023.
    • Slight 1.3% drop compared to H1 2023.

Major Funding Rounds and Notable Investments

Despite a backdrop of fluctuating investments, H1 2024 saw eight significant funding rounds exceeding $100 million each. Highlights include:

  • Flipkart’s $350 million Series J round led by Google.
  • Apollo 24|7’s $297 million PE round.
  • Meesho’s $275 million Series F round.

Emerging Unicorns and Soonicorns

Three new unicorns emerged in H1 2024, a notable rise from none in H1 2023.Additionally, 33 startups joined the ‘Soonicorn’ club, indicating strong potential for future growth.

IPO and Acquisition Activity

The number of IPOs surged to 17 in H1 2024, a significant increase from 6 in H1 2023 and 12 in H2 2023. However, acquisitions in the Indian startup ecosystem declined to 43 in H1 2024 from 75 in H1 2023. Noteworthy acquisitions include:

  • PingSafe acquired by SentinelOne for $100 million.
  • PureSoftware acquired by Happiest Minds for $94.5 million.

City-Wise and Investor Highlights

  • Top Cities: Bengaluru led in total funds raised, followed by Delhi and Mumbai.
  • Leading Investors:
    • Overall: Accel, Blume Ventures, and Peak XV Partners.
    • Seed Stage: Venture Catalyst, Z Nation Lab, and We Founder Circle.
    • Early Stage: Peak XV Partners, Alpha Wave Global, and Saama Capital.
    • Late Stage: DST Global, Epiq Capital Advisors, and UC-RNT Fund.
  • Looking Ahead: Optimism and Growth

    Neha Singh, Co-Founder of Tracxn, expressed optimism about the stabilizing funding environment, noting, “India’s robust performance as the fourth-highest funded country in the tech startup ecosystem

Acquisitions and Investor Insights

However, the acquisition landscape saw a downturn with 43 acquisitions in H1 2024, compared to 75 in H1 2023. Noteworthy acquisitions included PingSafe being acquired by SentinelOne for $100 million and PureSoftware by Happiest Minds for $94.5 million.

Among Indian cities, Bengaluru led the way in total funds raised, followed by Delhi and Mumbai. Accel, Blume Ventures, and Peak XV Partners emerged as the top investors in H1 2024. For seed-stage investments, Venture Catalyst, Z Nation Lab, and We Founder Circle were the frontrunners, while Peak XV Partners, Alpha Wave Global, and Saama Capital dominated early-stage investments. DST Global, Epiq Capital Advisors, and UC-RNT Fund were the key players in late-stage investments.

Encouraging Signs of Stabilization

Neha Singh, Co-Founder of Tracxn, noted that despite four consecutive half-year periods of declining funding since H1 2022, signs of stabilization and growth are now evident. “India’s strong performance as the fourth-highest funded country in the tech startup ecosystem is promising. Indian startups are driving economic growth through innovative advancements in retail, enterprise applications, and fintech,” she said.

Looking Ahead

The Indian tech startup ecosystem continues to evolve, showcasing resilience and innovation. With increasing investor confidence and a growing number of successful funding rounds, the future looks bright for Indian tech entrepreneurs.

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Prosus to Inject a Whopping $100 Million into BlueStone, Doubling Its Valuation!

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Dutch investment powerhouse Prosus is on the brink of leading a colossal $100 million funding round for the omni-channel jewellery startup BlueStone, sources reveal. This substantial investment is expected to skyrocket BlueStone’s valuation to an astounding $960 million, more than double its previous valuation of $440 million in September 2023.

The funding round will consist of both primary and secondary share sales. Notable VC firms such as Peak XV Partners, Steadview Capital, and Think Investments are also expected to participate. BlueStone is anticipated to secure around $60 million in primary capital, which will be reinvested into business operations, while the remainder will involve early investors selling a portion of their shares.

If finalized, this funding will follow Zepto’s recent $665 million raise, valued at $3.6 billion, underscoring a significant movement in the industry despite a generally subdued deal environment.

Prosus’s Strategic Move

This deal marks a significant milestone for Prosus, which has already invested over $7 billion in unicorns like Meesho and Swiggy. It represents Prosus’s first substantial late-stage investment since mid-2022, having recently focused on Series A deals with companies like Spotdraft and Virgio, as well as supporting portfolio startups such as Urban Company and Captain Fresh.

BlueStone’s Growth Trajectory

BlueStone has shown impressive growth, reporting Rs 788 crore in operating revenue for FY23, a significant increase from Rs 476 crore in FY22. The company has also managed to reduce its losses to Rs 167 crore from Rs 1,268 crore in the previous fiscal year.

Funding Trends in the Indian Tech Ecosystem

According to Tracxn data, the first half of 2024 saw a 13% decline in funding for domestic tech startups, amounting to $4.1 billion compared to $4.8 billion in the same period last year. The number of funding rounds also dropped by 54%, from 989 to 540. However, when compared to the second half of 2023, there has been a slight improvement, with overall funding increasing by 4% from $3.96 billion.

April 2024 recorded the highest monthly funding of $862 million, while January 2023 saw the highest funding of $1.41 billion in H1. This year has seen eight $100 million-plus funding deals, with notable companies like Flipkart, Apollo 24|7, and Meesho raising significant amounts.

  1. What are your thoughts on Prosus’s decision to lead a $100 million funding round for BlueStone? How do you think this will impact the jewellery startup’s growth?
  2. With BlueStone’s valuation more than doubling, what factors do you believe contributed to such a significant increase?
  3. How do you perceive the current funding landscape for tech startups in India, given the recent decline in funding rounds but slight overall funding increase?
  4. In what ways do you think BlueStone’s expansion plans will benefit from this new capital infusion?
  5. What are your predictions for Prosus’s future investment strategies in the Indian market, given their recent focus on early-stage deals and portfolio support?

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Indian Startups Secure $196 Million in a Week Amid Funding Fluctuations

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After a significant spike in funding last week, investment activity in the Indian startup ecosystem has slowed. Between June 24 and 29, startups raised a total of $196.47 million across 17 deals, reflecting a 75% drop from the previous week’s $800.5 million across 21 deals.

However, this comparison is somewhat misleading. Last week, quick commerce unicorn Zepto alone secured $665 million, accounting for most of the total. Excluding Zepto’s mega-deal, the rest of the ecosystem saw $135.5 million in funding, making this week’s $196.47 million seem less of a drastic decline.

Key Highlights of the Week

  1. Largest Funding Round:
    • NBFC Northern Arc secured $75 million in debt funding from FMO, highlighting the fintech sector’s attractiveness. In total, fintech startups raised $77.4 million across three deals this week.
  2. Ecommerce Sector Activity:
    • Ecommerce startups led in deal numbers, raising $48.3 million through five deals.
  3. Seed Funding Dip:
    • Seed funding saw a sharp decline of 69%, with only $6.9 million raised compared to last week’s $22.7 million.

Major Developments

  1. Ather Energy’s IPO Plans:
    • Electric two-wheeler manufacturer Ather Energy is gearing up for a public market debut, transitioning from a private to a public company, as revealed in its regulatory filings.
  2. Zepto’s New Funding Round:
    • Following its recent $665 million raise, Zepto is in talks to secure an additional $400 million, potentially boosting its valuation to $4.6 billion, up from $3.6 billion.
  3. Finnest’s Major Investment:
    • UK-based PE firm Finnest invested $160 million to acquire a majority stake in cloud kitchen startup Kitchens@, aiming to expand its business operations.
  4. Rupeek’s Down Round:
    • Gold loan provider Rupeek is close to raising $24 million in a funding round expected to mix primary and secondary transactions at a valuation of $250 million, a significant 60% cut.
  5. Amazon’s Investment in Amazon Pay India:
    • Amazon has infused $72 million into its Indian fintech arm, Amazon Pay India, to bolster its financial services offerings.
  6. NODWIN’s Acquisition:
    • Gaming company NODWIN, owned by Nazara, completed the acquisition of marketing services firm Freaks 4U Gaming GmbH in a deal valued at up to INR 271 crore.
  7. upGrad’s Debt Raise:
    • Edtech unicorn upGrad is set to raise $34.4 million through the allotment of NCDs and OCDs to EvolutionX Debt Capital, aiming to fund growth and operating expenses.
  • What are your thoughts on the recent trends in startup funding?
  • How do you see the fintech sector evolving in the coming months?
  • Which of these startups do you believe has the most potential for growth?
  • What do you think about Zepto’s rapid valuation increase and new funding round?
  • Share your insights on the challenges and opportunities for Indian startups in the current economic climate.

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Major Layoffs, Restructuring at Meta, US Lawsuit Against Adobe, and More: Top Tech News of the Week

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This week has been a whirlwind in the tech industry with significant layoffs, corporate restructuring, legal battles, and innovative launches. Here’s a rundown of the most impactful stories.

Bengaluru’s ReshaMandi Slashes Workforce by 80%

ReshaMandi, a prominent B2B marketplace in Bengaluru specializing in silk yarn products, has laid off 80% of its employees. The drastic downsizing is due to the company’s failure to secure Series B funding. Starting with 500 employees in January 2023, the company has reduced its staff to approximately 100 by the year’s end. Unfortunately, around 300 employees are still awaiting their final salaries and dues.

Meta’s Reality Labs Undergoes Major Restructuring

Meta, the parent company of Facebook, is restructuring its Reality Labs division, splitting it into two new groups: Metaverse and Wearables. This change has resulted in some layoffs, though the exact number remains undisclosed. The Metaverse unit will now focus on Oculus headsets, while the Wearables unit will develop other products, including Ray-Ban smart glasses.

US Government Sues Adobe Over Subscription Practices

The United States Department of Justice (DOJ) has filed a lawsuit against Adobe, accusing the software giant of misleading consumers. The lawsuit alleges that Adobe concealed early termination fees and made it challenging for customers to cancel subscriptions, violating federal consumer protection laws.

GST Discussions for Online Gaming in India Continue

The Indian government is engaged in ongoing discussions regarding the Goods and Services Tax (GST) on online gaming. The debates aim to clarify and potentially reform the taxation framework for this rapidly growing industry. Stay tuned for more updates on GST and online gaming in India.

Google’s Gemini App Launches in Indian Languages

Google has launched its new Gemini app, which supports multiple Indian languages. This initiative aims to enhance accessibility and user experience for non-English speakers in India. Find out more about how Google’s Gemini app is breaking language barriers.

Other Key Tech News:

  • Flipkart-Backed BlackBuck Transforms into Public Company: BlackBuck, supported by Flipkart, has officially converted into a public company, marking a significant milestone in its growth journey.
  • Peak XV Tops Hurun India Future Unicorn Index 2024: Peak XV Partners leads the latest Hurun India Future Unicorn Index, showcasing its influential position in the Indian startup ecosystem.
  • Delhivery and Xpressbees Explore Quick Commerce: Logistics giants Delhivery and Xpressbees are planning to enter the quick commerce space, aiming to leverage the booming market.

Conclusion

This week’s tech news highlights major shifts in the industry, from significant layoffs and corporate restructuring to legal challenges and innovative product launches. Stay informed on these developments to understand their impact on the global tech landscape.

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