Funding Winter Continues to Hit Startups Globally
The adverse impact of the much-talked-about funding winter continues to hit startups across the global hubs.
Venture Capital Funding Plummets by 63% to $7.8 billion
While venture capital funding plummeted by 63 per cent to $7.8 billion, it fell by about 47 per cent to $109.4 billion in the United States, and by 27.4 per cent in China to $42.6 billion in 2023. The decline in funding has been attributed to various factors such as macroeconomic challenges, ongoing conflicts, and geopolitical tensions.
India Remains Among Top-Five Global Markets
Despite the setback, India continues to be among the top-five markets globally. Startups with strong fundamentals and a clear roadmap continued to secure funding. India accounted for a 5.6 per cent share of the total number of VC deals announced globally during 2023, while its share of the corresponding deal value stood at 3.3 per cent. A total of 1,085 VC funding deals worth $7.8 billion were announced in India in 2023, representing a decline of 37.9 per cent in terms of volume compared to 2022.
China’s Funding Sees a 27% Decline
China also remains a key global market for VC funding, standing just next to the US. However, it suffered a 27.4 per cent decline in funding compared to 2022. A total of 3,220 VC funding deals with a disclosed value of $42.6 billion were announced in China in 2023, showing a decline of 16.6 per cent in terms of volume and 27.4 per cent in terms of value compared to 2022.
VC Deals in the US Take a Hit
The total VC funding deal value for the US took a prolonged 11 months to reach the $100-billion mark during the year. A total of 6,596 VC funding deals with a disclosed funding value of $109.4 billion were announced in the US during 2023, representing a decline of 43.5 per cent in terms of volume and 45.6 per cent in terms of deal value compared to 2022.
Outlook for 2024 Remains Uncertain
As the funding winter persists, the outlook for 2024 remains uncertain. The startup ecosystem will need to navigate through the challenges posed by the ongoing macroeconomic and geopolitical situations. It will require strong fundamentals, clear roadmaps, and innovative strategies to attract investor interest and secure funding in the coming year. Only time will tell how the global startup landscape will evolve in the face of these adversities.
Analyst comment
Negative news. The market is expected to face continued challenges due to the funding winter and macroeconomic and geopolitical situations. Startups will need to have strong fundamentals, clear roadmaps, and innovative strategies to attract funding. The outlook for 2024 remains uncertain and will depend on how these adversities are navigated.
