Tech sector still leads venture capital funding surge in India

India secured 483 VC deals.

India has secured 483 venture capital (VC) deals in the first five months of 2024, amassing a total funding value of $3.9 billion. Among all sectors, the tech sector has continued to dominate the VC funding landscape. 

Aurojyoti Bose, Lead Analyst at GlobalData, said that this is not a new trend. The tech sector has been a consistent leader in attracting venture capital, with investors particularly focused on startups working on advanced technologies such as artificial intelligence (AI) and cybersecurity. 

Bose emphasised that while the tech sector remains the frontrunner, promising startups across various sectors continue to attract investor interest, provided they have sustainable business models and clear roadmaps to scale and profitability. 

The growth in VC funding is driven by the significant innovations happening in the Indian tech space. "With some new innovations happening in areas such as AI and cybersecurity, VC firms are particularly keeping an eye on these startups. This is also driving a lot of investments in these spaces," Bose explained.

India's performance in securing VC deals has bolstered its global standing in the startup ecosystem. "India holds a 7% share of global VC deals in early 2024," said Bose. He highlighted that India is a key epic market for VC funding activity, standing just next to China in terms of both deal volume and total funding value. 

"India is among the top five markets in the world by VC deals volume as well as value," he added.

India's success in minting unicorns further underscores its strong position in the global startup landscape. "India is home to several unicorns and is again among the top creators of unicorns in the world. In 2024 itself, India has seen the birth of three new unicorns so far," Bose stated.

Looking ahead, the trends suggest a promising outlook for future VC funding prospects in India. "India's startup ecosystem seems to be gaining back investor confidence after a period of slowdown," said Bose. The recent improvement in VC funding activity could be an early sign that the "Old Glory Days" are making a return. However, Bose advised caution, noting that it will be important to monitor whether this momentum sustains in the coming months and how the VC funding landscape evolves.