"People took a breather to consolidate their investments in 2012. Startups are beginning to experience what is called a Series A crunch. This is expected to worsen in 2013-14. Companies need growth capital which is becoming increasingly hard to come by," said Kirani.

"In 2011, VCs sunk a lot of money in e-commerce ventures that showed tremendous revenue traction. They showed 30-50% growth month-on-month within a few months of operations. Other companies into cloud infrastructure, software-as-a-service and mobile apps didn't demonstrate such high growth rates in their initial days. Last year, VCs felt pumping huge monies into e-commerce was not sustainable anymore," said Mukund Mohan, CEO-in-residence of Microsoft Accelerator in his personal blog.

Few secondary deals and the absence of no IPOs of VC-backed ventures have reduced passion among investors. In 2011, there were no VC-backed IPOs, while in 2010; there were VC-backed IPOs worth a total of $46 million.