BENGALURU: From the beginning of 2024, funding into the start-up ecosystem has been increasing in February 2024 alone start-ups raised Rs 5,039 crore, a 7% jump compared to January 2024, and a 43% increase as against February 2023.
An analysis by market intelligence platform PrivateCircle Research points out that Bengaluru start-ups raised Rs 2,661 crore, which is 53% of total funding in February 2024, followed by Mumbai and Delhi NCR start-ups at Rs 922 crore and Rs 829 crore in funding, respectively.
With Rs 240 crore funding, Pune is also in the Top 10 cities list, followed by Hyderabad at Rs 201.94 crore, Jaipur at Rs 50 crore, Chennai and Ahmedabad at Rs 46 crore, respectively.
Only tier-1 start-ups managed to grab the funding as they attracted 99% of the total funding amount in February 2024. Also, the average deal size for tier-1 city start-ups was around Rs 33 crore and Rs 4 crore for start-ups from tier-2 and 3 cities. This means the average deal size in tier-1 cities was almost 8x of that in tier 2,3tier-23
On the findings, PrivateCircle’s Director of Research Murali Loganathan said, “The stark contrast in average deal sizes between tier-1 and tier-2, 3 start-ups highlights the challenges faced by start-ups outside major urban centres in accessing capital. While tier-2, 3 cities may offer lower operating costs and untapped talent potential, they often struggle to attract the same level of investment as their tier-1 counterparts. Investors looking to tap the broader Indian market need to seriously consider the opportunity in tier-2,3 cities."
Angel funding was the most popular investor type in tier-2 and 3 cities as they attracted 34% of angel rounds in February 2024. In terms of deal count, PrivateCircle Research recorded 130 funding deals in February 2024 compared to 113 deals the previous month and 109 in February 2023. This meant a 15% rise in start-up deal volumes in February 2024 as compared to January and 19% jump over February 2023.