MUMBAI: Global venture capital (VC) investments dipped 5.4 per cent on a quarter-on-quarter (Q-o-Q) basis from $81.4 billion in the second quarter of calendar year 2023 (Q2CY23) to $77 billion in the third quarter of calendar year 2023 (Q3CY23) as VCs remain cautious before closing deals.
The number of deals fell from 9,563 in Q2 CY23 to 7,435 in Q3 CY23, according to data from KPMG’s Venture Pulse Q3 2023 report.
On a year-on-year (Y-o-Y) basis, global venture financing has dropped 26 per cent from $105.9 billion in Q3CY22.
“VC investors continued to act cautiously, taking much longer to make deals than in recent quarters, intensifying their due diligence, business models and the paths to profitability of startups looking for investment,” the report said.
VC investments in India too have fallen by around 42 per cent on a Q-o-Q basis from $3.3 billion in Q2CY23 to $1.9 billion in Q3CY23. On a Y-o-Y basis, venture financing in the country also fell from $3.3 billion in Q3CY22.
“VCs have been quiet with new investments and were looking at portfolio consolidation in the past few quarters. However, we are seeing green shoots of deal activity and expect a strong increase in the next three to four quarters. Path to profitability and positive cash flows will continue to be key key performance indicators (KPIs),” said Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India.
The report added that VC investments were slow in the country in Q3CY23 as investors shied away from making large deals.
However, some of the large deals in the country include Juniper Green Energy, which raised $300 million, followed by online quick commerce platform Zepto, which secured $200 million.
Electric scooter companies Ola saw a $140 million funding whereas Ather Energy raised $108 million via a rights issue as opposed to equity. Captain Fresh, a fish and seafood supply chain platform, raised $71 million during the quarter, the report added.
Globally, Cleantech, including electric vehicles (EVs), accounted for more than half of the largest VC deals in Q3CY23, the report said.
The report expects both energy and cleantech to remain as key areas of investment as countries witness energy transition.
Among major investments in the cleantech space apart from India’s Juniper Green Energy includes Chinese electric vehicle manufacturers such as Neta Auto, Rox Motor, and Farizon, which saw significant investment activity.
Shanghai-based Rox Motor raised $1 billion in funding, followed by Neta Auto at $969.4 million, and Hangzhou-based Farizon, which raised $600 million as part of its Series A funding.
“Artificial intelligence (AI), energy, and cleantech are expected to remain very attractive to VC investors across most jurisdictions,” the report added.
Source: Business Standard
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