This week was quite turbulent for the Indian startup ecosystem, with a sharp drop in financing activity. Nevertheless, there was a bright side to the rush for IPO filings and new fund debuts. Here is a thorough analysis of the major events of the week.
Credits: Pocketful.in
Funding Takes a Hit: A 73% Decline
Between December 16 and 21, 2024, Indian startups raised a cumulative $171.2 million across 20 deals, marking a staggering 73% drop from the previous week’s $635.8 million through 25 deals. The decline is attributed to the absence of mega funding rounds, which are typically a driving force for higher numbers. Early-stage startups also faced a tough week, raising just $9.2 million—an 85% dip from the previous week’s $17 million.
Sector Highlights: Enterprisetech Leads the Way
While funding numbers fell across the board, the enterprisetech sector stood out, raising $117.32 million through five deals. Leading the charge was Zetwerk, which secured $70 million, bringing its total capital raised this year to $90 million. The company’s fundraise featured prominent investors like Indigo co-founder Rakesh Gangwal, Khosla Ventures, Greenoaks, and Avenir Growth.
In the fintech sector, five startups raised $23.7 million, with Veefin leading the pack by securing $16 million. These numbers highlight enterprisetech’s growing dominance as an investor favorite.
IPO Momentum Remains Strong
Despite the funding slowdown, IPO activity remained robust. Startups continued preparing for public listings, signaling investor confidence in India’s startup ecosystem. Here are the week’s key IPO updates:
Aye Finance Files for INR 1,450 Cr IPO
Non-banking financial company (NBFC) Aye Finance filed its draft red herring prospectus (DRHP) for a public offering worth INR 1,450 crore. The IPO includes a fresh issue of equity shares worth INR 885 crore and an offer-for-sale (OFS) of INR 565 crore by existing shareholders.
Physics Wallah Sets IPO Ball Rolling
Edtech unicorn Physics Wallah made its first move towards a much-anticipated IPO by transitioning into a public company. The company is targeting a public listing in 2025, further cementing its status as a leader in India’s education technology space.
InCred Financial Services Plans a Late-2025 IPO
Fintech unicorn InCred Financial Services revealed its plans to raise INR 4,000-5,000 crore ($470-590 million) through an IPO next year. This move underscores the sector’s continued growth trajectory despite short-term challenges.
SEBI’s IPO Guidelines
In a board meeting on December 18, the Securities and Exchange Board of India (SEBI) introduced new profitability requirements and capped shares eligible for sale via the OFS route for NSE SME IPOs. These measures aim to enhance investor confidence and streamline the IPO process.
New Funds for New Opportunities
Amid the funding downturn, the launch of new funds signaled a continued appetite for innovation and growth in niche sectors:
- Velocity launched a ₹200 crore ($23.5 million) fund to support the growth of restaurants and cloud kitchens on food aggregator platforms.
- Warmup Ventures unveiled its second fund, targeting $35.3 million to back 25-30 early-stage startups in deeptech, climate, and sustainability with ticket sizes of ₹5-7 crore.
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Credits: Zee Business
Other Notable Developments
The week also saw significant corporate actions and investments:
- Zaggle, a listed fintech SaaS company, announced a fundraise of ₹950 crore ($112 million) via a Qualified Institutional Placement (QIP).
- Nazara’s NODWIN Gaming fully acquired AFK Gaming for ₹7.6 crore, strengthening its position in esports and gaming media.
- Info Edge’s Redstart Labs increased its stake in pet care startup Sploot to 26.40% with an additional ₹3 crore investment.
- Cornerstone Ventures exited Intelligence Node after its acquisition by global advertising giant Interpublic Group (IPG).
- Athera Venture Partners received undisclosed funding from HDFC AMC’s Select AIF FoF I Scheme for its fourth fund, which will focus on consumer internet, enterprise software, and AI startups.
The Road Ahead
Despite the short-term volatility in funding, the Indian startup ecosystem remains resilient. Enterprisetech’s dominance and the steady momentum of IPOs underscore the sector’s long-term potential. Meanwhile, the launch of new funds signals optimism among investors seeking opportunities in innovative sectors like deeptech and sustainability.
