Technology Dealtracker: Q3 2023

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Deal activity in the tech sector in 2023 continue to remain subdued so far, compared to 2022. Valuations continue to be moderated in the tech sector in 2023, in line with global trends.

Deal activity in the first three quarters of 2023 saw a sharp decline, specifically in terms of values compared to the same period in 2022, with an 88% decline in values from USD 23 billion in 2022 to USD 2.8 billion in 2023. The third quarter in 2023 recorded a deal value of USD 1.5 billion across 87 deals, which translates to a 40% increase in value and 13% decrease in volumes respectively, as compared to Q2 2023, which saw 100 deals worth USD 1 billion.

The M&A space, which typically has been dominated by domestic consolidation, saw cross-border transactions accounting for almost 55% of the deals in Q3 2023. The PE and VC space saw a marginal drop in technology deals on a quarter-on-quarter basis.

Start-up funding in tech start-ups has slowed down in 2023 and investors continue to look at innovative and niche business models in areas like spacetech, SAAS, AI, generative AI, cloud etc. Through interactions with alternative investment funds, startup CEOs, and fund managers, the Indian government is actively trying to address operational barriers. To understand the factors causing the funding decline, they are also seeking insights from various sectors, including mutual funds, banks, and other stakeholders, demonstrating a proactive approach to fostering the startup ecosystem.