1947 Rise ☀️: 216

1. Funding in Indian startups shrinks by more than half

We are getting a more realistic update on the startup funding landscape in India, and as is true elsewhere, all the figures are in red in the South Asian market.

Indian startups raised $3 billion in the quarter that ended in September, down 57% from the previous quarter and 80% year-over-year, market intelligence platform Tracxn said in a report Tuesday. The figures are remarkable for many reasons, the most obvious being that startups are finding it difficult to raise capital at a time when most top tier funds in India — Sequoia India and Southeast Asia, Lightspeed Venture Partners, Accel, Elevation Capital, Matrix Partners India — have raised record large funds this year.

Second, the funding crunch appears to be more acute in India. Globally, funding was down 53% year-on-year and 33% quarter-on-quarter, according to data compiled by Crunchbase.

Funding in Indian startups shrinks by more than half

2. Late-stage startups tap alternative funding route amid softening valuations

Business-to-business ecommerce platform Udaan is in advanced talks to close a fresh round of debt financing of $150–200 million through convertible notes, people in the know told ET.

This will mark the second such capital infusion for the B2B startup this year at a time when late-stage equity funding is becoming scarce in one of the world’s fastest-growing startup ecosystems.

These notes, which will convert into equity at a later date, require no valuation to be ascribed to the startup currently. With desired valuations not coming their way, startups are resorting to these debt instruments to tide over the economic whiplash where cautious investors are demanding better unit economics and a path to profitability.

Online pharmacy marketplace PharmEasy, which has scrapped its plans to go public, is also looking to raise about $100 million through convertible notes, ET reported earlier, signalling the growing difficulties for late-stage startups looking to pick up equity capital in the current environment.

Late-stage startups tap alternative funding route amid softening valuations

Podcast Episode 🎙

Shiva Singh Sangwan (BLR) @shivassangwan

Believe in yourself ✨ It all starts from there. @shashank_kr believed in himself. Believed in @harshilmathur. The team at Razorpay believed in the founders & Razorpay's vision. And @ycombinator was the first believer in Shashank and Harshil. WATCH: bit.ly/3Viw2bn

WATCH: https://bit.ly/3Viw2bn

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Worth your attention:

1. Tiger Global targets $6 billion for new fund to back enterprise companies, Indian startups Link

2. Fireside Ventures closes largest fund at $225 million Link

3. GIC leads $60-million funding in EV startup Euler Motors Link

4. Ecom Express looks to raise $167 million through rights issue Link

5. Artha Group looks to close Rs 450-crore fund Link

6. Venture debt fund BlackSoil raises Rs 250 crore in fresh capital Link

7. D2C startup Good Health Company raises $10 million in funding led by Left Lane Capital Link

8. EV parts maker Vecmocon raises $5.2 million in funding led by Tiger Global, Blume Ventures Link

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