There is significant drop in deal activity in the Indian startup sector in 2023 (year-to-date) compared to the same period in 2022, according to a latest report. While there is 39 percent overall decrease in the number of deals, value-wise the decrease is 68 percent. There is a whopping 83 percent value-wise decline in mergers and acquisitions. These figures somewhat reflect the challenges the sector is currently facing.

During that July-September quarter there were 302 deals with values amounting to $13.4 billion in the country and the startup sector, along with e-commerce and IT & ITeS, led the way (64%). The Grant Thornton Bharat report is optimistic about India’s growth prospects for 2023-24 and adds that traditional sectors such as pharmaceuticals and healthcare as well as e-commerce and IT & ITES are likely to witness higher deal activities.

It is noteworthy here that there was no new unicorn in India in the first half of 2023, with startups raising just $5.48 billion during the period, compared to $19.5 billion during the same period last year. This data, provided recently by a market intelligence firm, reflects the funding winter facing the sector which witnessed 546 deal rounds in the first half of this year against 1,570 rounds in the same period last year.

Meanwhile, the IMF has raised its growth forecast for India for the current fiscal to 6.3 percent, pointing out stronger than expected consumption during April-June. On the other hand, the RBI last week retained the GDP projection for 2023-24 at 6.5 percent. In the background of this, along with growth-oriented policies, higher infrastructure spending and lower inflation, it seems our struggling startup sector will see a revival soon.

I invite your opinions.