Indian start-up funding drops by 70% in FY23 reveals Redseer report

financialexpress.com:

As per the Redseer’s path to profitability report, the Indian start-up fundings and deals has dropped by 70% in FY23 when compared to FY22. While it experienced a sharp funding peak during FY22 totalling around $50 billion, a gradual onset of funding winter over the subsequent quarters led to a 70% drop in FY23 to around $15 billion.

According to the report, increasing cost of capital and interest rates, decline in the value of technology stocks, recession in developed markets and slowdown in consumer internet growth are potential reasons for reduced funding.

Elaborating on private unicorns and publicly listed companies valued over US$ 1 billion, the Redseer report offers interesting insights comparing the two. There are about 100 unicorns and less than 400 public companies with a market cap of over $1 billion. While tech has an outsized impact on the economy, there is also a tendency for overvaluation in the startup world. As per the report, ownership of founders in startups is also limited (0-20%) in 59% of private companies, as

compared to public companies (50%+) in 65% of public companies. 

Furthermore, listed tech companies have made significant improvement over the last five quarters according to the report. On one side, where Policybazaar has cut its losses by reducing cost-of-customer-acquisition (CAC) related marketing expenses, Delhivery took on backward integration by acquiring full-stack solutions across the value chain. However, Paytm has launched new products to expand its business in new segments. To increase the revenue per customer and reduce the CAC, the company has upsold/ cross-selling to existing customers. Zomato has increased take rates from restaurant partners and delivery cost from customers.

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