(Weekly Funding Review July 20-26) VC Funding Inflows Fall Below $100 Million Level

The Union Budget had a lot of positive impact on the Indian startup ecosystem, but this does not seem to have trickled down to venture capital funding, as it has fallen to its third lowest level this year.

Total funding for the last week of the month reached just $71 million, spread across 16 deals. In comparison, the previous week’s total funding was $226 million.

The $71 million figure is the third lowest so far this year, with the previous two lows being $61 million in the first week of January and $66 million in the first week of April, according to YS Research. The other time it dipped below $100 million was in the last week of January at $76 million.

This is the fourth time that weekly venture capital funding has fallen below $100 million for the year. This trend exposes the challenges that the Indian startup ecosystem continues to face when it comes to raising capital.

The biggest hurdle for the Indian startup ecosystem is the constant absence of big ticket deals. Weekly funding has crossed the $500 million mark only twice this year. Overall, VC inflows average around $100 million to $200 million.

The Union Budget turned out to be a huge positive for the Indian startup ecosystem as the government finally announced an end to the Angel Tax system. The change in the taxation of long-term capital gains on unlisted securities is sure to draw investors’ attention to startups.

Moreover, the announcement of a Rs 10 billion venture capital fund for the space sector is expected to give a major boost to this segment, which is expected to be a game changer in the coming years.

Main transactions

Unimech Aerospace raised Rs 250 crore (approximately $30 million) from Steadview Capital Mauritius Ltd, ValueQuest Scale Fund and Evolvence India Fund IV Ltd.

Wealthtech startup Stable Money raised Rs 123.56 crore (approximately $15 million) from RTP Capital, Lightspeed India and Matrix Partners.

Flexible workspace provider Incuspaze has raised $8 million from India Inflection Opportunity Fund (IIOF) and other financial institutions.