Indian direct-to-consumer (D2C) startups saw their second year of consecutive funding decline in 2024, says a recent report by Tracxn, which is a leading market intelligence platform. The D2C space only managed to raise $757 million in 2024, an 18% drop from $930 million raised in 2023 and a whopping 54% fall from the $1.6 billion raised in 2022.

The D2C space hit its record funding highs in 2021 and 2022, then funding started to drop consistently, making 2024 the lowest-funded year since 2021," the report added.

Neha Singh, Co-Founder, Tracxn, said, "Investors are focusing more on profitability and sustainable growth. Overall funding is down due to investor caution and general economic problems." In spite of this slowdown, India is still second among all countries globally in D2C funding after the US alone and ahead of China, the UK, and Italy.

Though early- and seed-stage funding experienced growth, overall total funding decrease was significantly contributed by a massive decline in late-stage investment, which declined by half from $526 million in 2023 to $261 million in 2024, and by 71% from the $912 million raised in 2022.

The report blames the funding downturn on increased investor wariness in the context of a slowdown in the global economy, saturation of the market with comparable brands, and unstable unit economics from high customer acquisition costs. Also, D2C brands are facing issues such as expensive offline expansion and the need to be profitable, which has led many to look towards acquisitions as an exit option.

Early-stage investment grew by 25% to $355 million, and seed-stage investment grew by 18% to $141 million over the same period, though both were short of their 2022 highs.

India has close to 11,000 D2C businesses, but only about 800 have received funding so far. The report points out that the most funded categories in the D2C space are organic beauty, online jewelry, and beauty brands. D2C natural beauty brands collectively garnered $105 million in 2024, a significant 79% jump from $58.5 million in 2023. D2C jewelry brands drew in $94.8 million, down by a 15% dip from last year's $112 million, while D2C beauty brands raised $56.1 million, up 7% from $52.4 million in 2023. BlueStone dominated the top of the funding chart in 2024 by securing $71 million in a Series D funding round at a valuation of $964 million.

Bengaluru was the top city for D2C funding in 2024 with $253 million, followed by Gurugram with $164 million and Mumbai with $99.8 million.

Interestingly, India's D2C ecosystem has yielded just four unicorns up until now: Lenskart, MyGlamm, boAt, and Licious. Whereas the Indian D2C sector keeps experiencing a funding slowdown, continued government policies like the Open Network for Digital Commerce (ONDC), the Export Promotion Mission, and the Government e-Marketplace (GeM) are giving founders hope for a possible revival of funding in the future years.

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