As the funding winter continues, the venture capital order is getting upended. Foreign firms such as Tiger Global, Sequoia, SoftBank, Accel, and Y Combinator have nearly shut their taps, reported Business Standard.
Tiger and Accel have seen their investments fall by 97 per cent in 2023 so far, compared to the same period last year. Sequoia’s is down 95 per cent, Y Combinator’s 87 per cent, and SoftBank’s 80 per cent, according to data from Tracxn, the market intelligence platform.
Foreign money plays a crucial role in start-up funding in India. Of the $26.8 billion that Indian start-ups raised in 2022, as much as $26 billion came from rounds where foreign investors participated.
This year, though, foreign investment in India’s start-ups has plummeted 72 per cent to $4.58 billion so far, from $16.2 billion during the same period last year. The number of deals fell from 852 to 241.
Tiger is often called the unicorn machine of India, having backed Flipkart, Ola, Zomato and 37 others that went on to become unicorns.
Accel was an early backer of Flipkart and Freshworks. Japan’s Softbank has invested in OYO, Delhivery, Paytm, Meesho, Blinkit, Lenskart, and many others.
On the other side of the spectrum, home-grown VC firms have raised significant capital in the last two months for India-focused investments. Multiples Alternate Asset Management leads the pack with a $640 million fund, followed by 3one4 Capital ($200 million), Chiratae Ventures ($120 million), and Stride Ventures ($100 million). Matrix Partners, which has Ola and Razorpay in its portfolio, extended the target size of its India-focused fund to $525 million from $450 million.
However, investments by Indian VC firms have declined as well, according to the Tracxn data, to $1.75 billion so far this year from $12.3 billion during the same period last year.
