Indian startup funding fell by 33% and may return to normal within 2-3 quarters: Report

• ByStartupStory     |    January 11, 2023

According to a report released on Wednesday, funding for Indian startups in CY22 was close to $24 billion, a decrease of 33% from CY21 but still more than twice as much as was raised in CY20 and CY19, respectively.

In CY21 and CY22, early-stage agreements accounted for 60–62% of the overall capital (in volume terms). According to the PwC India research, the typical ticket size for each agreement was $4 million.

Amit Nawka, Partner-Deals and India Startup Leader, PwC India said, “With significant dry powder waiting to be invested, it seems likely that the funding scenario will begin to normalise after 2-3 quarters.” 

According to him, many businesses are taking advantage of the current period to tighten operational models and maximise their cash runway by postponing discretionary expenditures and investments. 

The financing values for the software-as-a-service (SaaS) segment increased by 20% in CY22 compared to CY21 and made up over 25% of all funding activities. 

88% of CY22’s financial activity came from growth and late-stage investment arrangements (in value terms). 

In CY22, growth-stage deals had an average ticket size of $43 million and late-stage acquisitions had an average ticket size of $94 million. 

The majority of Indian startups—nearly 82 percent—are located in Bengaluru, Delhi-NCR, and Mumbai. 

According to the research, almost 28% of the startups in the top three locations had raised more than $20 million.

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