February Sees Decline in Indian Startup Funding

In February, Indian startups experienced a substantial drop in venture fund inflows, falling below the $1 billion threshold following a robust January. This decline is primarily due to a reduction in the number of significant funding rounds.

As per data collected from multiple sources, Indian startups accumulated $802 million through 98 transactions in February. Of this, growth and late-stage investments contributed $633 million from 24 deals, while early-stage funding brought in $183 million across 63 deals. Notably, 11 funding rounds did not disclose their amounts.

Month-on-Month Trend

February’s figures represent a significant 54% decrease from January’s $1.76 billion. Nonetheless, when compared to trends over the past three years, funding in February appears relatively stable.

Top 10 Growth-Stage Deals

In January, the contactless payments provider ToneTag topped the list with $78 million, followed closely by Udaan and SpotDraft with $75 million and $54 million, respectively. Additionally, Cashfree, Zeta, and Geniemode successfully raised over $50 million each. Other notable transactions included 75F, Rapido, PMI Electro Mobility, and JQR. For further details, please consult various sources.

Contrary to January, which saw three domestic startups each secure over $100 million, February lacked any deals surpassing the $100 million mark.

Top 10 Early-Stage Deals

SaaS company Lucidity raised $21 million in Series A funding, while AI venture TrueFoundry secured $19 million. The top five early-stage funding rounds also featured Spyne, Cognida.ai, and Singulr AI.

Mergers and Acquisitions

February witnessed significant mergers within the Indian startup scene. Perfios acquired CustomerXPs, a platform focused on fraud detection known as Clari5, for an undisclosed sum. Furthermore, Veranda Learning expanded its footprint in commerce education by purchasing stakes in BB Virtuals and Navkar Digital. Head Digital Works also strengthened its offerings with the acquisition of the online poker site Adda52, among others.

City and Segment-Wise Deals

Bengaluru-based startups secured a notable $462.69 million across 46 transactions in February, representing 57.64% of total funding. Delhi-NCR followed with $154.59 million from 21 deals (19.26%). Mumbai attracted $142.65 million from 15 deals (17.77%), while Pune and Hyderabad had fewer transactions at 5 and 3 deals, respectively.

The fintech sector garnered the highest funding with $183.62 million, trailed by e-commerce at $156.8 million. SaaS raised $147 million, while AI, healthtech, EV, and automotive sectors also received considerable investments. Smaller areas such as logistics and deeptech saw funding, though agritech and consumer electronics lagged behind. However, the number of deals told a different story.

Series-Wise Deals

February saw seed funding lead the deal count with 32 transactions, followed by Series A, pre-Series A, and pre-seed with 15, 11, and 10 deals, respectively. Series A funding raised $139.2 million, making up 17.34% of the total money collected. In funding amounts, Series B achieved the highest with $228 million across seven deals.

Shutdowns, Key Hires, and Departures

Flipkart announced the closure of ANS Commerce, its full-stack e-commerce enabler. Additionally, February marked a period of considerable changes in leadership within the startup ecosystem, with 13 senior executives—including CEOs, MDs, CPOs, co-founders, and managing partners—departing their positions. Simultaneously, over 28 executive roles were filled, indicating a wave of transitions. Detailed information on these changes can be found here.

Trends

A notable trend in funding is observed after lengthy gaps: Amazon-backed ToneTag became a rare startup to secure funding following a seven-year dry spell. Similarly, Cashfree attracted funds after a four-year hiatus, while Zeta (equity) and Oxyzo (debt) received investments following a three-year lull.

The dominance of SaaS and AI in early-stage deals is evident. Analysis shows that among the $180 million raised in early-stage funding, SaaS and AI startups accounted for nearly $100 million in February.

Quick commerce has received a boost as food tech leader Zomato invested $178 million in its quick commerce branch, Blinkit, while Swiggy allocated $117 million to its supply chain division, Scootsy Logistics, aiming to bolster its quick commerce platform, Instamart. Both companies are public now, which is likely to influence other participants in the quick commerce sector.