[Weekly funding roundup Oct 24-28] Debt at risk exceeds equity

The last week of October saw an interesting trend emerging from the Indian startup ecosystem. The debt component of venture capital inflows this week was higher than equity raised – and perhaps that’s a reflection of the times.

The total funding inflow was $114 million this week, spread across 10 deals. This is a sharp drop from the previous week, when Indian startups raised $419 million. However, consideration should also be given to the Diwali holiday which fell this week.

Interestingly, the venture capital debt raised by Indian startups was $170 million, which was certainly higher than equity financing. The tastes of Udaan and Capital of the North Arc raised funds through debt, underscoring caution in the funding environment that has grown over the past two months.

boAt founders: Aman Gupta (left) and Sameer Mehta

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The funding winter has also led many startups to postpone their IPO plans. The stock prices of these startups that went public in 2021 and this year are all trading well below their IPO price.

Given the situation, there is unlikely to be a quick turnaround in venture capital inflows, as the macroeconomic environment shows no signs of stabilizing to restore investor confidence.

The remaining months of the year will be even more difficult for startups as this period is likely to see a slowdown in overall business activity.

Key transactions

consumer electronics company boAt Lifestyle raised $60 million (Rs 500 crore) from Warburg Pincus and Malabar Investment.

Capital Kinaraa fintech lender, raised Rs 200 crore ($24 million) from British International Investment (BII), Nuveen, and the ASN Microkredietfonds.

Devtronthe open-source DevOps platform headquartered in Gurugram, has raised $12 million from Insight Partners, Leo Capital and angel investors.

cybersecurity startup BluSapphire electronic systems raised $9.2 million from Barings India, Dallas Venture Capital, RPG Ventures and Merisis Venture.

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