Funding chill for startups may linger on in new year

THE FUNDING WINTER of 2023, which hurt startups across the board, is unlikely to get much better in the new year. While there is some optimism among a section of the investor community about a gradual rebound, most rule out a quick recovery. The downgrades in valuations of might continue next year as well, 

- AYANTI BERA

However, businesses with lean and efficient models and a sustainable growth outlook will fare better in terms of investments during cautious times.

In 2023, funding in Indian tech startups hit the lowest in five years, as per Tracxn data, continuing a funding slump that began in the middle of last year.

"If we start seeing a reversal in some of the macro issues, one can then expect a gradual improvement in the funding environment," said Ashish Sharma, managing partner at venture debt firm InnoVen Capital.

He expects funding to remain sluggish in the year ahead."From an India standpoint, there are two other things to keep an eye on-the general elections and the performance of tech companies that have gone public.

Much like Sharma, many investors will closely watch the impact of the parliamentary elections and the US Federal the performance of tech es that have gone public." like Sharma, many 11 Reserve's monetary policy on the funding environment. Earlier this Th Fed's policy, coupled with a frenzied IPO market in India, is likely indices have been on a bull run in the past few months and hit lifetime highs more than once.

"Generally, private investing folklows public markets with a lag so we hope next year is better. There's a bunch of macro triggers like the elections and Fed's policy that might dictate short-term sentiment," said Kanika Agarrwal, partner at earlystage investor IndiaQuotient.