Indian startups raised $3.36 billion from 245 venture transactions in the first quarter of 2023. Of the total fundraising, 51%, or $1.72 billion, was accounted for by just seven startups that sealed nine megadeals, according to the India Deal Review: Q1 2023 report by DealStreetAsia DATA VANTAGE.
Eyewear retail chain Lenskart raised the largest single round in the quarter, at $500 million, while digital payments firm PhonePe raised $650 million in total across three rounds.
While the number of megadeals in the March quarter inched up from five in Q3 2022 and seven in Q4 2022, it is still 70% below the level seen a year ago, when Indian startups had sealed 31 megadeals that raised a combined $7.2 billion, or 60% of that quarter’s overall fundraising.
A closer look at the top megadeals also shows that cheque sizes have shrunk amid the funding winter. In the year-ago quarter, the two biggest deals had raised $800 million and $700 million respectively.
The average megadeal size in Q1 2023 was $191 million, down 18% from $233 million in Q1 2022. The fall is a sign of the weakness in overall fundraising in the country, which fell 72% to $3.4 billion in the quarter, from $12 billion in the year-ago three-month period, according to the report.
“Indian growth funds and PE firms have accelerated activity with a deep evaluation of growth assets across the ecosystem, longer due diligence timelines, and a clear preference for sustainable business models with a line of sight to profitability….this has led to a marked slowdown in the growth stages,” said Nruthya Madappa, Partner, 3one4 Capital.