2023 Indian tech startup investment is a mixed bag of pvt. & govt.

The Indian tech startup scene has been seeing active months this year.

In October, Atal Incubation Centre (AIC), Pinnacle Entrepreneurship Forum, a startup incubator and accelerator supported by Atal Innovation Mission (AIM), Niti Aayog, Government of India, announced that the cumulative valuation of its incubated startups has surpassed the milestone figure of INR 300 crores.

AIC-Pinnacle backed startups have raised around Rs. 30 crores in funding from various sources such as angel investors, awards, and challenges. These investors have given 30 firms a total market worth of over Rs 300 crores, with the largest start-up valued at Rs 40 crore. AIC Pinnacle has raised significant funds for businesses by forming strategic connections with Angel Investors, Venture Capital firms, and financial institutions.

A seed capital of Rs 5.41 crores from various government initiatives that has been leveraged to attract over Rs 30 crores of equity with a total market valuation of more than Rs 300 crores demonstrates the value offered by our unique support system

Dr. Sudhir Mehta, Chairman of Pinnacle Industries & EKA and Founder of AIC-Pinnacle Entrepreneurship Forum

Dr. Sudhir Mehta, Chairman of Pinnacle Industries & EKA and Founder of AIC-Pinnacle Entrepreneurship Forum, said, “We are glad to see leading investors recognizing the potential of these business concepts to scale up and become profitable. This will help AIC Pinnacle to empower the next generation of entrepreneurs by developing unique ideas and commercializing them. A seed capital of Rs 5.41 crores from various government initiatives that has been leveraged to attract over Rs 30 crores of equity with a total market valuation of more than Rs 300 crores demonstrates the value offered by our unique support system.”

On a more private front, Yudiz Solutions, a digital transformation and technology services provider based in Ahmedabad, tied up with India Accelerator, a startup accelerator, as the preferred technology partner for over 200+ startups associated with the accelerator’s expanding global programs.

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The MoU is aimed at establishing a strategic partnership between Yudiz Solutions and India Accelerator to leverage the former’s expertise in providing technology solutions, consultancy and services to startups and entrepreneurs associated with the latter, promoting innovation, entrepreneurship, and technology-driven solutions in the startup ecosystem, and fostering a collaborative environment that supports the development and growth of early-stage businesses.

Similar efforts and initiatives are evident in several tech sectors.

AI

This month, SenseAI Ventures, an AI investment platform, launched SenseAI Fund I, an INR200 crore ($25 million) initiative dedicated to fostering India’s AI startup ecosystem. The fund is poised to invest in 18-20 AI-first startups, focusing on Seed/Pre-A stage companies. Additionally, the fund plans to make follow-on investments in its most promising portfolio companies.

We recognize that the journey of an AI-first startup is as challenging as it is transformative

Rahul Agarwalla, Co-founder of SenseAI Ventures

Rahul Agarwalla, Co-founder of SenseAI Ventures, commented, “We recognize that the journey of an AI-first startup is as challenging as it is transformative. Our approach is beyond capital; as experienced founders and operators we offer bespoke support tailored to the unique needs of each AI-first startup. AI is the single largest value creation opportunity of our lifetimes. In this new era of AI, SenseAI is not just a participant, but a catalyst for groundbreaking change.”

FinTech

According to a report in October by Tracxn, a market intelligence platform, India’s FinTech landscape, which witnessed a surge in Q4 2021 followed by a gradual decline, experienced a notable upswing in Q3 2023. Despite the challenges posed by factors like rising borrowing costs and recession in developed markets, the sector observed a 68% uptick in funding compared to Q2 2023. According to the report, India ranked 4th globally in terms of FinTech startup funding, underscoring its position as a significant player on the global stage.

The report highlights that the sector witnessed significant growth in specific segments with Alternative Lending, Banking Tech, and RegTech emerging as top performers in H1 2023.

Q3 2023 also witnessed significant funding in late-stage rounds, with Perfios, a real-time credit-decisioning platform, securing a notable $229 million in a series D round led by Kedaara Capital.

The quarter saw seven acquisitions, a slight drop of 12% from eight acquisitions in Q3 2022. Notable acquisitions included Fego, an open banking platform, which was acquired by Perfios, Bridge2capital, a supply chain financing platform by IIFL Finance and FundsIndia, an investment platform for mutual funds, by WestBridge Capital.

Two companies, Zaggle and Veefin went public in Q3 2023, showcasing the growing maturity of the Indian FinTech ecosystem.

Bengaluru emerged as the leader in total fintech funding raised during Q3 2023, followed closely by Mumbai and Noida, reaffirming the significance of these as Fintech hubs in India’s startup landscape.

Peak XV Partners, Y Combinator and Accel were the top investors in the space. Y Combinator, 9Unicorns and Upsparks Capital led the seed investments, while Accel, Elevation and Lightspeed Venture Partners were prominent in early-stage investments.

DeepTech

In October, Java Capital, a Deep tech VC fund announced the final close of INR 50 crore fund. The fund has seen participation from established founders from the Indian startup ecosystem, HNIs based in India, Middle East, and the US. With this successful closing, Java Capital plans to open a greenshoe portion of INR 25 Crores, responding to sustained interest from Limited Partners (LPs).

Read more: “I’ve always held the belief that our trade is investment-led; it will grow exponentially if we have more investments both ways” – Anil Wadhwa, Former Secretary, India’s Ministry of External Affairs

Java Capital’s mission is to build a portfolio of startups in Deep Tech, Climate Tech, and B2B. The fund has already made five investments in companies, including AuditCue, Okulo Aerospace, Oorja, Pre-image, Frigate. Java has previously invested in companies such as Agnikul Cosmos, The Eplane Company, Cynlr, KUKU FM, Eat Better, Codingal, YellowMetal. 

In September, Applied Ventures, LLC, the venture capital arm of Applied Materials, Inc., along with Applied Materials India Private Limited, selected seven deeptech startups during the fourth cohort of its startup engagement program, ASTRA (Applied Startup Technology & Research Accelerator) in Bengaluru. Based in India and Singapore the selected startups during ASTRA 2023 include Lightspeed Photonics, Portkey, Sungreen H2, Exposome, OIP Technologies, App Sentinels, and Ethereal Machines.

Blockchain

In October, the Software Technology Parks of India (STPI) marked a significant milestone as the Ministry of Electronics & Information Technology (MeitY) Secretary S. Krishnan inaugurated a state-of-the-art incubation facility of the Apiary Center of Entrepreneurship (CoE) at STPI-Gurugram. Apiary is one of the CoEs of STPI which is focused on Blockchain Technology and is set up in collaboration with MeitY, STPI, Govt. of Haryana, Padup Ventures, IBM, Intel, GBA, and FITT.

This CoE is a first-of-its-kind initiative to identify and support promising startups and promote entrepreneurship in the field of blockchain technology. It has a fully furnished incubation infrastructure of 7,000 sq. ft. equipped with 80 plug-n-play seats, conference rooms, and an auditorium.  It targets to incubate an overall 100 startups in a period of 5 years.

Blockchain technology can be sustainable for our economy. It can be used right from supply chain to waste management. It has the potential to become an enabler in sustainable growth

Sushil Pal, Joint Secretary, MeitY

Sushil Pal, Joint Secretary, MeitY, said, “Blockchain technology can be sustainable for our economy. It can be used right from supply chain to waste management. It has the potential to become an enabler in sustainable growth.”

Arvind Kumar, Director General, STPI said, “Blockchain technology has a lot of potential and is considered to be the biggest invention since the internet. This incubation facility at Apiary CoE is a stepping stone towards India’s digital transformation.”