[Weekly funding roundup Feb 21-27] Steep fall in VC inflow due to absence of large deals

Venture capital funding in Indian startups saw a sharp decline in the last week of February, largely due to the absence of any high-value deals. This highlights the ongoing challenges faced by the ecosystem in raising capital.

The total funding for the week amounted to $184 million across 32 deals. In contrast, the previous week saw VC funding of $705 million driven by Neysa’s $600 million transaction.

This week, the number of deals remained reasonably high at 32, but the total value stayed low, as the majority were pre-Series A investments. This indicates that investors are willing to back early-stage startups requiring smaller capital commitments but remain hesitant to write large cheques for late-stage funding.

These developments reveal the challenges the Indian startup ecosystem continues to face in terms of raising capital. There is no definite theme or sector where the investors can put in their money. Even the artificial intelligence (AI) segment is not gaining traction in India unlike in other geographies like the US or China.

Interestingly, a few AI startups with Indian origins but headquartered in the US continue to attract funding, particularly from marquee venture capital firms. This week saw Meltplan and Gushwork AI raising capital.

Key transactions

Deepinder Goyal’s wearable startup Temple on Friday raised $54 million in its first round of funding, reaching a post-money valuation of approximately $190 million.

Creator commerce platform Wishlink raised $17.5 million from Vertex Ventures Southeast Asia & India, Fundamentum and Elevation Capital.

Fintech startup XFlow raised $16.6 million from General Catalyst, Square Peg, Stripe, Lightspeed, Moore Capital, and PayPal Ventures.

Chennai-based MSME lending platform Prayaan Capital raised Rs 110 crore ($12 million approx.) led by Peak XV Partners.

D2C brand Home Essentials raised Rs 70 crore ($7.6 million approx.) from 360 ONE Asset and India Quotient.

Wootzwork, an engineering and manufacturing startup raised $6.6 million from Z47, Nexus Venture Partners, AdvantEdge Founders, and Stride Ventures.

Financial services startup FREED has raised Rs 60 crore ($6.6 million approx.) from Aavishkaar Capital, Sorin Investments, Piper Serica, and Sattva Ventures.