Deals digest: Funding activity plunges in post-Diwali week

Bengaluru: Private equity and venture capital deals took a dive in both value and volume terms, as Diwali limited activity last week.

With no significant transaction, the total value of deals by private companies slumped to below $50 million, for the first time in 2023.

The phenomenon of a slump in funding in the post-Diwali week has been consistent over the last few fiscals.

Similarly, mergers and acquisitions (M&A) activity also slumped to one of the lowest recorded in the year, with only one deal inked in the consumer space during the week-ended Friday.

Startups secured $19 million, a 94% fall from the previous five-day period wherein the total deal value stood at $342 million.

Parallelly, deal volume last week fell significantly as seven PE/VC transactions were recorded in the five-day period.

In contrast, 30 deals were recorded in the previous five-day period, one of the highest recorded in the year.

This is the third time that the cumulative deal value for a five-day period has fallen below the $100 million mark. The last recorded instance occurred in April when startups managed to secure $75 million in funding.

However, this is also the first recorded instance of deal value dropping below the $50 million mark.

The current funding numbers also come at a time when deal flow in the startup ecosystem was stabilising to a large extent. As mentioned above, deal value had not fallen below the $100 million mark since April.

The sentiment was subdued even for small fundraises, which dominated funding activity in the last few months. Only a handful of startups managed to take home cheques in the $1-10 million range.

In last week’s largest transaction, healthcare-focussed fintech platform CoverSelf raised $8.2 million in a seed funding round, co-led by its existing investors 3one4 Capital and Beenext.

The round saw participation from new investor Z21 Ventures, among others.

Bengaluru-based Inito also raised $6 million in a Series A funding, led by Fireside Ventures. The round also saw participation from undisclosed family offices and angel investors.

The M&A space also witnessed a similar slowdown, as only one deal was inked last week as compared to three deals the week before that.