Wednesday, 11 January 2023 – Funding for Indian startups in CY22 was nearly USD 24 billion, a drop of 33% in comparison to CY21 but was still more than twice the funds raised in CY20 and CY19 each. As per the PwC India report titled, “Startup Deals Tracker – CY22”, early stage funding grew by 12% as compared to CY21, showing that despite the global slowdown, investors are still positive about the Indian start-up ecosystem. Additionally, the SaaS segment witnessed an increase of 20% in funding values during CY22 compared to CY21 and accounted for nearly 25% of all funding activity in CY22.
Amit Nawka, Partner – Deals & India Startups Leader, PwC India, said, “Despite the funding slowdown, some areas like SaaS and early-stage funding have remained upbeat. With significant dry powder waiting to be invested, it seems likely that the funding scenario will begin to normalise after 2-3 quarters. Until then however, many start-ups are using this time to tighten operating models and optimise their cash runway by deferring discretionary spends and investments.”
Startup Perspectives for CY22 – A snapshot
- Stages of funding: Early-stage deals accounted for 60–62% of the total funding in CY21 and CY22 (in volume terms). Average ticket size per deal was USD 4 million per deal. In value terms, early-stage deals contributed to approximately 12% of the total funding in CY22 compared to nearly 7% in CY21. Growth- and late-stage funding deals accounted for 88% of the funding activity in CY22 (in value terms). These represented 38% of the total count of deals. Average ticket size in growth-stage deals was USD 43 million and late-stage deals was USD 94 million during CY22.
- M&A transactions: A 17% decline was witnessed in M&A deals during CY22 compared to CY21 in terms of deal volume, with 60% of the transactions being contributed by the top three sectors – SaaS, e-commerce+D2C and EdTech. E-commerce and D2C (61) and SaaS (60) witnessed the highest number of M&A transactions during CY22.
- City-wise start-up funding: Bengaluru, NCR and Mumbai account for nearly 82% of total Indian start-ups as of December 2022. 28% of the start-ups in the top three cities have raised in excess of USD 20 million. Bengaluru witnessed the highest number of unicorns, followed by NCR and Mumbai. Similar trends have been noted for other companies that have raised more than USD 50–100 million.