The Decline in Startup Funding | A Detailed Analysis

May 2024 marked a significant downturn for Indian startups in terms of funding, with a notable decrease compared to previous months and years. Here's a closer look at the trends and shifts observed in the startup ecosystem.

Overall Funding Decline

Startup funding in May 2024 dropped dramatically by 34% year-over-year (YoY) and 24% month-over-month (MoM), totaling $657 million. This sharp decline represents the lowest May funding for Indian startups since 2020, indicating a challenging period for the industry.

Increase in Deal Count

Interestingly, despite the overall decline in funding, the number of deals increased. There were 100 deals in May 2024, an 11% MoM rise and a significant 25% YoY increase. This suggests that while the total amount of capital raised has decreased, investor interest in smaller or earlier-stage deals remains strong.

Stage-wise Investent Trends

Seed Stage Investments: These remained relatively stable, totaling $107 million across 50 deals, marking a 2% YoY increase. This steadiness indicates ongoing support for nascent startups.

Growth Stage Investments: Funding at this stage fell by 30% YoY to $216 million, reflecting investor caution or shifting focus away from startups in their expansion phase.

Late Stage Investments: The most significant decline was seen here, with a 45% YoY drop to $298 million. This suggests a reduced appetite for higher-risk, larger investments during this period.