'Quick trip to Bengaluru should...’: Zerodha’s Nikhil Kamath says start-up funding winter has formally begun

Funding winter within the start-up ecosystem has formally begun, said Indian stock brokerage firm Zerodha’s co-founder Nikhil Kamath. He also said in a post on Twitter that cabs, food deliveries, and other things will become expensive. He also said that the time has come when discounts will be going away. 

“The #startupfunding winter has formally begun,if anyone has any doubts, a quick trip to #Bangalore should remedy this. With unnatural discounts going away for consumers, what was practical yesterday will be #expensive tom.; think cabs, food delivery,  creator economy, what else?,” Kamath’s post read.

The entrepreneur and investor also shared some graphs from a report by Bain and Company which revealed that start-up funding has been declining consistently since June 2022. The report noted that in April, funding reached $980 million which is considerably low compared to $3.4 billion in June 2022. 

In addition, factors such as geopolitical conflicts (Ukraine-Russia crisis), central banks raising interest rates, disruption in supply chains, corporate governance issues within the tech industry can be attributed for funding sliding down massively within the global start-up ecosystem. 

The report stated that despite the gloomy state, some of the positives last year include investments outside metros going up by 18 per cent, India surpassing China in the number of unicorns, and opportunities within the EV sector going up. 

As per data from Tracxn, the funding winter is fairly pronounced in India now, with investments in start-ups in Q1 2023 (March quarter) declining 75 per cent over Q1 2022. The number of funding rounds too decreased by 63 per cent from 816 in Q1 2022 to 301 in Q1 2023.

Late-stage funding (Series C and beyond) was the worst hit, recording a 79 per cent drop between Q1 2022 and Q1 2023. Even on a quarter-on-quarter basis, investments in late-stage start-ups dipped 23 per cent over the December quarter. Early-stage rounds, meanwhile, saw a marginal drop of 4 per cent compared to Q4 2022, but a significant 68 per cent year-on-year decline over Q1 2022.

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