ETtech Deals Digest: Funding drought persists as startups raise just $1.06 billion in May

Indian startups managed to raise just $1.06 billion in May, according to data provided by market intelligence firm Tracxn, with the flow from funding taps thinning down to a trickle.

Funding activity saw a 69% decline year-on-year from the $3.42 billion raised by startups in May 2022. Month on month, there was a 44% slump in activity compared to April 2023, when startups raised $1.9 billion.

The funding numbers for May were bolstered by late-stage investments in app development startup Builder.ai and Walmart-owned fintech major PhonePe. These two deals together accounted for a third of the total inflow in May.

While Builder.ai raised $250 million from Qatar’s sovereign wealth fund Qatar Investment Authority (QIA), PhonePe picked up an additional $100 million from New York-based equity firm General Atlantic, as part of its $1 billion funding round.

In May, late-stage funding dominated the investment landscape, accounting for 63% of the total investments, and amounting to $669 million. Seed-stage funding reached $141.7 million, constituting 13.3% of the total funding, while early-stage funding amounted to $255 million, representing 23.7% of the total funding.

Venture Catalysts and IPV were the busiest VCs with four rounds each, while Sequoia Capital participated in three funding rounds.

Here’s a look at key deals during the month.

App development startup Builder.ai raises $250 million: App development platform Builder.ai has raised $250 million as part of its latest round of funding, which was led by sovereign fund Qatar Investment Authority (QIA). The round also saw participation from existing and new investors, including Iconiq Capital, Jungle Ventures and Insight Partners. The company said it will use the capital to grow its talent, partnerships and technology functions, as well as innovate on its platform.

PhonePe gets another $100 million from General Atlantic: Walmart-owned digital payments company PhonePe said on Monday that it has raised an additional $100 million (around Rs 828 crore) from growth equity firm General Atlantic. With this, General Atlantic has invested around $550 million in the Walmart-backed fintech firm in its latest round of funding. Bengaluru-based PhonePe has so far raised $850 million via five infusions in this round and is inching closer to its billion-dollar fundraising target.

SpiceJet subsidiary SpiceXpress to get $100 million from UK group: Budget carrier SpiceJet on Monday said its subsidiary SpiceXpress and Logistics will receive a $100 million investment from a UK-based group. SpiceJet, which is facing financial headwinds and is the subject of an insolvency plea by an aircraft lessor, recently hived off SpiceXpress.

Digital consumer brand Atomberg raises $86 million in funding: Atomberg, a digitally native consumer appliances brand, has raised $86 million in a funding round led by Temasek and Steadview Capital, with participation from Trifecta Capital and existing investors Jungle Ventures and Inflexor Ventures. The funding was raised through a mix of primary and secondary issuances. The company, founded by IIT Bombay alumni Manoj Meena and Sibabrata Das, will use the infusion to boost manufacturing capabilities, support new product launches, and deepen its offline presence across key regions.

Puma India head Abhishek Ganguly’s new startup Agilitas Sports raises $52 million: Abhishek Ganguly, outgoing India and Southeast Asia managing director of Puma, has raised Rs 430 crore (around $52 million) for his new venture, Agilitas Sports, in its first funding round. Ganguly, who is leaving the German sports and apparel maker in August, told ET that Agilitas Sports will look to partner and invest across the sports ecosystem, from manufacturing to retail to technology.

Bus transport tech company Chalo raises $45 million: Public transport technology company Chalo has raised $45 million in a funding round led by Avataar Ventures, along with existing investors Lightrock India, WaterBridge Ventures and Amit Singhal (former Senior VP and head of Google Search). Chalo also announced that it had secured an additional $12 million in venture debt from Trifecta and Stride Ventures.

EV cab startup BluSmart raises $42 million in funding from BP Ventures, others: Electric vehicle (EV) ride-hailing company BluSmart said it has raised $42 million in a mix of debt and equity from existing investors. Almost 50% of the round was subscribed by BluSmart founders Anmol Jaggi, Punit Goyal, Anirudh Arun, Tushar Garg, Rishab Sood and Rahul Jain, and the leadership team. BluSmart’s investors include BP Ventures, Inflection Point Ventures and LetsVenture. The round included $37 million in equity, with the rest as debt from Trifecta Capital, Alteria Capital, Stride Ventures and others.

Beauty etailer Purplle picks up $40-50 million in funding from ADIA: Online beauty products retailer Purplle has closed a $40-50 million funding round, split between primary and secondary transactions, at a flat valuation of $1.1 billion, people aware of the matter said. As part of the secondary transaction, Purplle investor JSW Ventures has partially exited from the company, selling its stake to Abu Dhabi Investment Authority (ADIA).