Blume report shows 41% increase in funding for startups in small towns, while Bengaluru, Mumbai, and NCR experience a decline
- ByStartupStory | March 7, 2023
Investments in startups that originated in small towns experienced a significant increase of 41 percent in 2022, while funding for hubs like Bengaluru, Mumbai, and the national capital region (NCR) decreased by 48 percent during the same period. This suggests that the concentration of startups is gradually shifting from major cities to smaller towns.
Blume Ventures’ Indus Valley Annual Report 2023 revealed that the proportion of non-metro startups in the total deals has risen from 1.6 percent in 2019 to 2.8 percent in 2022.
The report also brought attention to the emergence of numerous angel networks supporting this trend at the local level. Among them are BITS Spark, TiE Pune, AngelList, Jharkhand Ventures, Venture Catalysts, Calcutta Angels, and The Chennai Angels, which provide seed funding to young entrepreneurs.
The report stated that India ranked fourth in terms of receiving venture capital investments, following the United States, China, and the United Kingdom. It’s worth noting that although India’s share of global GDP was 3.4 percent, it received 4.8 percent of venture capital funding, indicating its attractiveness to investors.
In contrast, China’s share of the global GDP is larger, but it only accounted for 13.8% of global venture capital funding.
Investors have been making fewer investments in the later stages of startups due to the funding winter. The report shows that there was a decline of 55 percent in the value of growth-stage funding in 2022, which refers to investments in companies that are over 10 years old or Series G or later rounds of institutional investments.
This decline contributed to about 90 percent of the overall fall in funding in 2022. However, seed-stage investments also saw a decline of 25 percent.
Even though the number of seed funding rounds decreased from 2,003 in 2022 to 1,150 in 2023, the average deal size for this segment increased by 30% year on year, reaching $1.1 million.
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