Indian startup ecosystem saw a shift in funding trends for the H1 2024. The debt investments increased  by 2 times to $576 million compared to last year. Inc42 report mentioned a two-fold increase in debt  funding for this year’s first half from $285 million raised last year. While the equity investments took  an 8 percent y-o-y hit in H1 2024.  

The startups choose the debt funding approach as it allows them to scale operations without the need  for existing stakeholders to dilute their stake in the firm. The major debt funding rounds for the first  half of this year include a $50 million debt funding round raised by GPS renewable and the debt funding  of $25 million by Bira91. Bira 91 is a craft beer manufacturing startup that secured 25 million USD in  its debt funding round from Kirin Holdings and Tiger Pacific Capital in March. Ola Electric also had  approval for Initial Public Offering from the Security Exchange Board of India. The company filed a draft  red herring prospectus to raise Rs 5,500 crore through its public listing. 

The equity investments saw a decline of 8 percent to $4.7 billion during the same period. The non banking finance company Northern Arc secured the most debt funding between January to June. The  startup raised $75 million via FMO in June and $80 million from IFC in April. Northern Arc led the  overall debt funding for the first half of this year. The total funding amount secured by the startup was  around $77.4 million through FMO across three deals. 

Debt funding before listing is the common approach in IPO-bound companies. Many startups including  Ola Electrics, Mobikwik, and Bluestone raised debt investments in the first half of 2024. The venture  debt firms were the most active investors and the Venture debt company Stride Ventures led the list  by investing in around 46 startups including Ather Energy, LendingKart, Zyod, and Ola Electrics. Indian  startups had a 1.8 percent decrease this year and secured around $5.3 billion in the first half. However,  the number of deals increased by 7 percent to 504 in the same duration. 

Conclusion: 

Indian startup ecosystem saw a two-times increase in debt investments for the first half of this year as  compared to H1 2023. The debt funding rounds increased for this year however the equity investments  decreased by 8 percent to 4.7 billion USD. Many startups selected this approach as the debt  investments remove the pressure on existing stakeholders and allow the startups to scale their  operations. The major debt funding round for this year’s first half was a $25 million round from Bira  91 led by Kirin Holdings. GPS Renewable secured $50 million in its debt funding round. The nonbanking  lending company Northern Arc secured the biggest debt amount, buoyed by its $77.4 million raised  across three deals via FMO. Venture debt company Stride Ventures was the most active investor that  invested in around 46 startups.