VC financing for the first 9 months of 2024 will increase by 30% y/y

Venture capital (VC) financing for Indian startups appears to have broken out of the winter funding grip as the first nine months of 2024 saw fund inflows increase by almost 30% year-on-year compared to the similar period a year ago.

Total VC funding from January to September 2024 was $10.5 billion, compared to $8.1 billion raised in the first nine months of 2023, according to estimates. YourStory Research. However, the Indian startup ecosystem failed to achieve a bull run in 2022, when it attracted $19.7 billion.

The increase in VC financing was also driven by an increase in the number of transactions. The total number of transactions for the first nine months of 2024 was 998 compared to 811 in the period a year earlier.

On trend, total funding in 2024 is likely to exceed the $10.8 billion raised last year, setting the stage for strong growth in 2025.

The inflow of capital has already shown a positive trend this year. Fund inflows have consistently exceeded the $1 billion mark since May. In September alone, total VC funding was $1.386 billion compared to $857 million raised in September 2023, representing a year-over-year increase of 62%.

However, in a month-to-month comparison, August 2024 turned out to be an outlier with a decline of 19% y/y.

These trends are certainly bringing a sense of relief to the Indian startup ecosystem, which is evident in the late-stage funding category, which is showing the greatest driving force and providing the largest injection of funding. Fast-trading unicorn Zepto raised more than $1 billion this year.

In the July-September quarter, the late-stage category generated the highest capital at $3.892 billion, followed by the early-stage category at $2.850 billion. The venture debt financing category saw an inflow of $1.370 billion.

The fintech sector raised the highest funds in the third quarter of 2024, totaling $2.493 billion, followed by the hyperlocal sector – $1.015 billion and the healthtech sector – $760 million. The fintech segment consistently maintains a leading position in terms of VC financing.

In terms of cities, Bengaluru topped the list with $3.139 billion, followed by Delhi-NCR with $3.016 billion and Mumbai with $2.7 billion in Q3FY25. While these three metros continue to be startup hubs, other locations like Chennai, Hyderabad and Pune are showing traction.

The overall signs are certainly positive for the Indian startup ecosystem, and the number of startups going public via initial public offering (IPO) is a clear sign of maturity. Currently, there is optimism regarding VC funding for 2025.