Fintech, SaaS lead secondary deals frequency in 2023: Private Circle research

Total startup funding dropped 62% year-on-year in 2023, with Rs 67,000 crore raised through the year, according to market intelligence firm Private Circle.

Fintech, SaaS lead secondary deals frequency in 2023: Private Circle research

Tuesday January 23, 2024,

2 min Read

Fintech and software-as-a-service (SaaS) sectors saw the highest number of funding transactions in 2023, continuing the trend for the second straight year, as per research market intelligence firm Private Circle in its Indian Startups Deal Report 2023.

Private Circle evaluated 117 startups that have been valued at $500 million or above in the last three years. It has tracked a total of 252 secondary deals for these 117 startups since 2021. 

A secondary round takes place when an existing shareholder sells their shares to a third party.

In 2021, during the peak funding climate, ecommerce saw the highest number of secondary deals followed by fintech and media and entertainment, among others.

“We can see fintech coming up in all three years, showing the sector’s ability to provide exits to investors. SaaS is also common in both 2022 and 2023, showing the sector’s resilience in providing exits to investors,” said Murali Loganathan, Director of Research, PrivateCircle.

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However, the total startup funding dropped 62% year-over-year in 2023, with Rs 67,000 crore raised through the year against Rs 1,80,000 crore in 2022 and Rs 2,42,000 crore in 2021, the report noted. 

The number of deals in 2023 fell 72% in 2023 compared to previous years. Primary funding rounds stood at 1,444 deals in 2023 as compared to 5,000 odd deals in 2022, the report added.

Peyush Bansal-led Lenskart raised the biggest funding round of $500 million from Abu Dhabi Investment Authority followed by the likes of DMI Finance, PhonePe, CleanMax, Udaan, and others.

“Even though funding rounds have slowed down, venture capital funds are sitting on ample dry powder. Funds usually have a ten-year cycle for investments and they can only raise capital in the first three. Given that the cautious approach of investors has now continued for almost two years, we expect to see venture capital activity pick up pace later this year,” Loganathan added.

Edited by Kanishk Singh

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