Funding activity to increase in 2024 with scaled startups leading the show

Bengaluru, 14 March: Scaled startups are likely to come back to the market for another round of fund raising, driving growth in venture capital activity in 2024, a report by Bain & Company and Indian Venture and Alternate Capital Association (IVCA).

These big startups had raised capital during 2020 & 2021 boom period and are looking for another round of fund raising in 2024.

“We are seeing some greenshoots in investment activity, but it’s yet to go back all the way… that will continue to be the dominant theme of 2024. We expect that investment activity will pick up in 2024 over 2023. We believe we have troughed it out. A lot of deals currently under diligence will come to fruition in H2. We’ve already seen two unicorns in 2024, and we expect some of that will start improving incrementally,”said Sai Deo, partner, Bain & Company.

According to the report, investments in India in 2023 declined to $9.6 billion from $25.7 billion in 2022.

Traditional sectors are slowly getting the attention of private equity funds for funding though technology-powered startups will continue to get favourable consideration.

“We expect to see more investments into traditional sectors in 2024. Historically, there have been several successful investments that VC firms have made. Over the last couple of years, while tech-focused investments have been fundamental…there is renewed recognition of the fact that there are good businesses in traditional sectors. For example, offline retail, credit-focused banking, financial services and insurance (BFSI) companies could see increased interest from VCs,” she said.

Among emerging sectors, generative AI and electric vehicle (EV) segments have already seen rising interest from PE and VC funds.Funding for generative AI startups surged to $250 million in 2023 from $15 million in 2022.