According to a report, venture capital funding for startups has decreased by 35% since 2021
- ByStartupStory | December 9, 2022
According to research by market intelligence platform Tracxn, Indian entrepreneurs have raised a total of $24.7 billion so far this year, a 34% decrease from the $37.2 billion they raised during the same period in 2021. This decrease was attributed by Tracxn Geo Annual Report: India Tech 2022 to a dip in late-stage investments, which decreased by 45% to $16.1 billion between January and November of last year.
Around the same time, seed-stage rounds decreased by 38% as well. The funding winter, which started in the fourth quarter of 2021, will continue into 2023, according to Neha Singh, co-founder of Tracxn. “Rising interest rates and worries of a worldwide recession have led to investors being more risk-averse,” she added.
Larger ticket (over $100 million) investment rounds have also decreased, from 85 last year to 55 this year. BYJU’S raised $1.2 billion in two $100 million plus rounds, followed by VerSe Innovation and Swiggy, who have raised $805 million and $700 million, respectively, in 2022 to date. She continued, “Startups are taking unit economics more seriously in order to survive the drought, which has been illustrated via the sequence of large layoffs that have occurred this year.
The survey noted that in 2022, corporate apps, fintech, and retail emerged as the top-performing industries in funding. However, compared to last year, funding for fintech and retail fell by 57% and 41%, respectively, demonstrating that even these sectors are not immune to the effects of the funding slowdown.
The business strategies of organisations like Slice and Uni Cards have suffered as a result of an RBI guideline that forbids non-bank financial institutions (NBFIs) from filling their prepaid instruments using credit lines. Additionally, due to the significant fluctuation in asset values this year, crypto exchanges worldwide, including those in India, are having operating issues.
Edtech has also seen a drop in 2022, with funding falling by 39%. Neha said, “Although we are currently experiencing a slump, the situation is prompting startups to establish clearer and more sustainable paths to growth, as investors’ evaluation metrics begin to emphasise profitability over growth at all costs.”
Despite a slowdown in the industry, five over-$100 million rounds raised by BYJU’S, LEAD School, upGrad, and PhysicsWallah will account for 70% of funding in 2022. The report also highlighted the 11 IPO exits, the 22 startups joining the unicorn club ($1 billion+ valuation), the city of Bengaluru leading the most funding raised, and the three most active investors of the year: LetsVenture, AngelList, and Y Combinator.
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