Indian start-ups raise $10 billion in Q3, down 15% QoQ
Start-ups in India have raised a whopping $10 billion in the third quarter (July-September) of 2024, a report by market intelligence firm 1Lattice has revealed. The figure marks a 15% decline in funding from the second quarter (April-June). The number of deals also witnessed a major decline of 30%, dropping from 318 in Q2 to merely 229 in Q3.
Top-funded start-ups and shift in deal-making trends
The top-funded start-ups during this period were online coaching platform PhysicsWallah, ride-hailing unicorn Rapido, and quick commerce platform Zepto. Abhilasha Jaju, Director at 1Lattice, noted a change in investment trends. "Despite a positive long-term outlook, Q3 has seen a 30% decline in deal volume, coupled with a 20% increase in average deal size," she said. This indicates a shift toward high-ticket deal-making in quality assets.
PhysicsWallah and Rapido secure significant funding
PhysicsWallah bagged a $210 million funding round on September 20, the largest fundraising for an edtech firm after COVID-19. The round was led by Asian hedge fund Hornbill Capital and joined by venture capital firm Lightspeed Venture Partners, valuing the edtech company at $2.8 billion. In comparison, Rapido raised $200 million in a financing round led by its existing investor WestBridge Capital last month, attaining a unicorn status with a $1.1 billion valuation.
Equity investments dip, debt deals rise in Q3
The report also highlighted a change in the nature of investments. Equity investments dropped to $5.8 billion in Q3 while debt deals witnessed a major spike, rising to $4.2 billion from $2.2 billion in the last quarter. Debt deals made up 40% of the total capital raised this quarter, showing a growing inclination toward this kind of investment among start-ups and investors alike.
BFSI sector leads funding activity in Q3
The banking, financial services, and insurance (BFSI) sector topped the funding activity with $3.5 billion, which was followed by the telecom sector with $2 billion. The software-as-a-service (SaaS)/artificial intelligence (AI) sectors also garnered major investments, raising $1.2 billion in total. Late-stage investments were majorly driven by the e-commerce and listing platforms sector, which raised about $650 million.
