According to a report by Inc42, seed funding for Indian startups has suffered an 81% year-on-year decline in Q1 2023, with only $180 million raised across 102 deals. This marks the lowest amount raised in any quarter since the start of 2021. The top sectors to receive funding in Q1 2023 were enterprise technology, fintech and ecommerce. Although late and growth-stage funding declined, investor sentiment for seed funding improved towards the end of 2022, with pi Ventures, Grayscale Ventures, Zero To One and Piper Serica Advisors all raising funds for early-stage startups. Despite the downturn, the popularity of pre-seed and seed-stage startups with micro VC funds suggests the decline may be temporary.
It appears that there are still some investors who are interested in backing early-stage startups despite the overall downturn in seed funding. The examples you mentioned – pi Ventures, Grayscale Ventures, Zero To One, Piper Serica Advisors, and SphitiCap – all suggest that there is still money flowing into the seed-stage ecosystem in India. Additionally, as VCs pivot towards making smaller bets, it could lead to more opportunities for early-stage startups to secure funding. However, it’s worth noting that the current downturn in seed funding could still last for some time, and it’s important for startups to be strategic and resilient in their fundraising efforts.
It seems that in the fintech space, InsuranceDekho was the standout startup in terms of funding, having raised $36.5 Mn in a Series A round which brought its total fundraising to $150 Mn. Excluding InsuranceDekho, there were eight other fintech deals in the first quarter of 2023 that totaled $21.5 Mn.