Startup funding by private equity and venture capital firms fell to an eight-month low of $596 million in February, representing a decrease both month over month and year over year, according to Morgan Stanley.
The slowdown in PE-VC funding has been dramatic, both in terms of funds raised and the number of deals completed. Startup funding fell by more than 83%, from $3.6 billion in February 2022 to $596 million in February 2023. According to the report, the total number of transactions fell from 103 to 35.
However, the decrease in investments in startups by PE-VC firms is not a new trend. In July of last year, fundraising plummeted. The total investment by PE-VC firms between January and June 2022 was $17.9 billion. However, startups only raised $5.4 billion between July and December 2022.
Fintech and food startups have emerged as top PE-VC picks.
Fintech and food startups emerged as the month’s top investments, accounting for nearly 60% of total investments.
In February, six fintech startups raised a total of $280 million: Insurancedekho, PhonePe, Mintoak, Stable Money, LoanTap, and LoanKuber.
According to the report, investment trends have shifted. While 66% of fintech investments went to lending businesses last year, 63% of investments in February 2023 went to fintechs providing payment gateway solutions.
According to Morgan Stanley, startup funding by private equity and venture capital firms fell to an eight-month low of $596 million in February, representing a decrease both month over month and year over year.
FreshToHome, a single startup, raised $104 million in the restaurant & food category. Its Series D funding round was led by Amazon Smbhav Venture Fund and will be used to open 100 retail locations. The remaining $212 million was raised in various categories such as ecommerce, edtech, enterprise tech, and others.