Indian Startups Funding Report October 2023

Indian startups have collectively raised approximately $137 million in funding over the past week, involving 5 growth-stage deals and 20 early-stage deals. Notably, 5 startups opted not to share their transaction specifics.

Growth-stage Deals

Within the growth-stage funding sector, Cashfree, a digital payments enabler, secured $53 million in a Series C round led by KRAFTON. Meanwhile, the logistics company Shadowfax raised $16.8 million across two tranches from investors including Mirae Asset, Nokia Growth Partners, and Edelweiss. Additionally, Apex Kidney Care, a dialysis service provider, attracted $9 million from Blue Earth Capital. The women’s wellness and hygiene brand Nua raised $4 million, and the education-focused NBFC Auxilo obtained a debt funding of $5.7 million from Motiwal Oswal.

Early-stage Deals

In the early-stage category, 13 startups managed to secure funding totalling $48.43 million. TrueFoundry, an AI startup, spearheaded this segment with $19 million in a Series A round, followed by Cognida AI and brands such as HairOriginals, a D2C hair extensions and wig business, Astra Security, a cybersecurity firm, and Dreamfly Innovations, a battery technology startup. Several others, including the lab-grown diamond brand COLUXE and the AI-powered hiring platform Vahan AI, also raised undisclosed amounts.

City and Segment-wise Deals

Bengaluru-based startups led the charge with the highest number of funding deals, totalling 10, followed by companies located in Delhi-NCR, Mumbai, Pune, and Hyderabad. In terms of sector performance, AI and Healthtech startups took the lead with 5 deals each, while Fintech startups secured 3 deals. Logistics, E-commerce, SaaS, and others also participated actively in funding.

Series-wise Deals

Seed funding deals emerged as the frontrunners for the week with 9 transactions, succeeded by Series A, pre-seed, Series C, Series F, among others.

Week-on-week Funding Trend

Startup funding has decreased by 43.15% this week, summing up to $136.93 million compared to approximately $240.85 million raised the previous week. The average funding over the last eight weeks stands at around $325.91 million with an average of 25 deals each week.

Key Hirings and Departures

This week experienced notable leadership shifts, particularly at Shadowfax, which appointed Bijou Kurien, Ruchira Shukla, and Pirojshaw Sarkari as independent directors. Aisle, a dating app, appointed Chandi Gaglani as the Head of Aisle Network. Meanwhile, Livspace restructured its management with COO Ramakant Sharma promoted to CEO, and the outgoing CEO transitioned to Chairman of the Board. SoftBank-backed Delhivery welcomed Vani Venkatesh as Chief Business Officer and added Namita Thapar and Sameer Mehta as non-executive independent directors.

On the flip side, Flipkart’s chief product and technology officer, Jeyandran Venugopal, resigned, and Priyanka Gill from The Good Glamm Group stepped down to launch her own jewellery brand, COLUXE.

Mergers and Acquisitions

This week also saw noteworthy acquisitions, including Perfios, a B2B fintech firm, acquiring CustomerXPs, a fraud detection platform, along with Adar Poonwala’s family office purchasing a 20% stake in premium auction house AstaGuru. Additionally, Veefin Group acquired UAE-based TradeAssets.

Fund Launches

Info Edge, the parent company of Naukri and 99acres, announced a commitment of $115 million to IE Venture Investment Fund III, aimed at investing in tech-driven startups in India.

New Launches and Partnerships

Several companies made headlines with new launches: Bhavish Aggarwal initiated Krutrim AI Labs with a ₹2,000 crore investment, while Lokal launched multiple applications, including Dostt, Eaze, and Gyan TV, with plans for 40 more. Collaborations were also in the spotlight; KRAFTON India partnered with KukuFM to introduce an audiobook of BGMI: Lone Survivor.

Moreover, the following partnerships took place: Careernet expanded to the US, Great Learning introduced two AI products, Aye Finance joined forces with Credgenics, MediBuddy collaborated with Japan’s ELECOM, Tata Communications and CoRover.ai worked together on AI solutions, Ola Electric launched its first EV bike, and Univest entered the broking sector.

Financial Results This Week

Ola Electric reported a 50% increase in losses to ₹564 crore in Q3 FY25. Astroyogi achieved over ₹85 crore in revenue for FY24, while Pepperfry continued its growth struggles, with losses dropping by 37.5%. Info Edge posted ₹722 crore in revenues, with profits surging by 2.5 times. Swiggy surpassed ₹4,000 crore in revenue, with InstaMart growing by 2.1 times, and Probo recorded ₹459 crore revenue and ₹92 crore profit. CaratLane and Infibeam also reported significant revenue surges.

Potential Deals

Kunal Shah’s CRED and Newtap are set to lead a ₹550 crore investment into an NBFC arm. TAC Security plans to acquire CyberScope as part of its global Web3 expansion, while ITC aims to acquire Meatigo to enhance its presence in the frozen and chilled foods market. Paytm Cloud is looking at a 25% stake acquisition in Delaware-based Seven Tech. Additionally, IPO-bound Zetwerk is preparing to raise about $30 million at a valuation of $3.1 billion.

News Flash This Week

Noteworthy developments include PhonePe Group’s exit from the Account Aggregator business, Zomato’s board approval to rename itself Eternal, and the GST authorities dropping a ₹5.91 crore tax demand against Zomato. Shein is entering the Indian market again through a partnership with Reliance Retail, and HDFC Bank launched the eighth edition of its Parivartan Start-up Grants programme, aimed at supporting over 50 startups.

Summary

Overall, startup funding saw a significant decline this week, and Zomato announced its rebranding. PhonePe decided to partner with account aggregators instead of remaining in the Account Aggregator business. Shein is making a comeback in India, and HDFC Bank is set to support social impact startups through substantial grants.