Startup funding fell below $100mn last week amid fewer deals

The deal value fell from $2.2 billion in the second week of April to just $75 million last week, to a seven-week low. Although the Manipal-Temasek deal constituted the bulk of the capital for the week ended 15 April, the remaining transactions contributed around $200 million.

Deal volumes, too, reflected a similar trend with a significant decline in deal volumes to just 11 compared to 21 deals in the previous week, according to data collated by VCCircle.

However, activities around mergers and acquisitions (M&A) picked up in terms of volume during the week.

While funding activity appeared to be stabilizing in February after a nine-year trough in 2022, it has significantly declined since.

In last week’s largest deal, aerospace components manufacturer Aequs Pvt. Ltd secured $27.5 million in an equity round led by mid-market private equity firm Amicus Capital. VCCircle was the first to report in January that the PE firm had emerged as the lead contender to invest in the company.

The healthcare sector saw most activity in an otherwise evenly distributed sectoral split, with Emil Pharmaceutical Industries Pvt. Ltd, raising $18.3 million in a round from healthcare-focused PE firm Somerset Indus Capital Partners.

Omron Health Care and Sony Innovation Fund, along with The University of Tokyo Edge Capital, Inventus Partners and SG Innovate invested $8.5 million in cardiac-focused healthtech startup Tricog Health as part of its Series B2 round.

The healthcare sector has attracted considerable investor interest in the last two years.

According to Bain and Co’s India Private Equity Report 2023, the sector accounted for approximately 8% of total PE and VC investments in India in 2022, or deals worth $4.3 billion.

According to the report, the surge in investor interest in India’s healthcare sector can be attributed to the successful exits of some players last year.

The sector saw nearly $3.5 billion in exits, expanding its share into the overall exit market to 16% in 2022.

Large exits such as the one by KKR-Max Health and Everstone-Sahyadri were the talk of the town across the PE landscape last year, along with the initial public offerings of Medanta and Rainbow Hospitals.

According to the Bain report, investors are looking closely at diagnostics, healthcare providers, pharmaceuticals and single-specialty service providers for stable returns.

Early-stage deals continued to dominate, with artificial intelligence-based platform SwitchOn raising $4.2 million in a Series A round led by a Singapore-based fund, along with existing investors Pi Ventures, Axilor Ventures and Chennai Angels.

Hyperlocal content production platform Knocksense also secured funding from Nitish Mittersain, the founder of gaming firm Nazara Technologies, as part of a pre-Series A round.

The week also saw three transactions with undisclosed deal sizes.

Meanwhile, M&A transactions were up three times last week with over nine reported deals, from just three deals in the previous week.

Fortis Healthcare Ltd said it had signed definitive agreements with the VPS Group to acquire the Medeor Hospital in Manesar, Haryana, for ₹225 crore ($27.4 million).

Wipro Consumer Care and Lighting, which is part of billionaire Azim Premji’s Wipro Group also announced the acquisition of Kerala-based ready-to-cook brand Brahmins. The deal size could not be ascertained.

Canadian investment firm Fairfax sold a bulk of its stake in wealth management firm 360 One WAM Ltd (formerly IIFL Wealth & Asset Management) to make nearly ₹210 crore ($26 million).

k.amoghavarsha@livemint.com