Firms with strong basics to relax amid “funding winter”
- ByStartupStory | December 26, 2022
Startup valuations have fallen from the lofty heights of 2021, and fund flow into the ecosystem in 2022 has been lower than last year, but not significantly so.
According to EY data, startup investments totaled slightly more than $37 billion in 2018, $46.5 billion in 2019, and $47.5 billion in 2020, before skyrocketing to $77 billion in 2021 with the emergence of 44 unicorns, or startups worth at least $1 billion. Despite the slow start to 2022, 20 startups have joined the coveted $1 billion club, and according to Vivek Soni, a partner for private equity services at EY India, it is likely to end with $53 billion-$55 billion in private equity (PE) and venture capital (VC) investments.
“In 2022, we haven’t had a cloth discount within the variety of offers, although the cumulative funding worth is around 30% decrease than 2021. Despite this discount, 2022 can be our second-best year for PE- and VC-driven funding exercise,” Soni added.
“Among all emerging markets, India has stood out with its continued growth, backed by robust domestic demand. Despite the recent funding slowdown in the startup space, companies with strong management teams, strong balance sheets and compelling offerings, as well as the ones that are already profitable or showed a demonstrable path to profitability will be attractive to investors. We expect to see startup funding pick up pace, especially for companies with sound fundamentals,” Ravi Lambah, head of funding group, and head of India at Singapore state investor Temasek Holdings, stated.
As per reports, Temasek backed a number of its portfolio firms in 2022 corresponding to Lenskart, Shiprocket and upGrad, supporting them with new acquisitions in 2022. Temasek’s India publicity additionally hit a report of an excess of $16 billion.
Most investors, however, said that despite the global liquidity crunch, rising interest rates and policy-related risks linked to China have helped India emerge as a bright spot for global investors looking to deploy money.
The other reason why India is expected to see a better funding environment next year is because of the amount of dry powder that is waiting to be deployed.
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