According to a recent report by PwC India, funding for Indian startups dropped by 33% in 2022, with a total of USD 24 billion raised compared to the previous year. Despite the decline, the report titled ‘Startup Tracker-CY 22’ stated that the amount is still double the funds raised in 2019 and 2020.
The report highlighted that global investors remain positive about the Indian startup ecosystem, despite the global slowdown. Amit Nawka, Partner – Deals & India Startups Leader, PwC India, said, “some areas like SaaS (Software as a service) 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.”
As per the report, early-stage deals accounted for 60-62% of the total funding in 2021 and 2022 in volume terms, with an average ticket size per deal of USD 4 million. In value terms, early-stage deals contributed to approximately 12% of the total funding in 2022, compared to nearly 7% in 2021. Growth and late-stage funding deals accounted for 88% of the funding activity in 2022 in value terms, representing 38% of the total count of deals.
Furthermore, the report found that Bengaluru, NCR and Mumbai accounted for nearly 82% of total Indian startups as of December 2022, with 28% of startups in these cities raising in excess of USD 20 million. Bengaluru had the highest number of unicorns, followed by NCR and Mumbai.
Despite the funding slowdown, many startups have been using the current situation to tighten their operating models and optimize cash runway by deferring discretionary spends and investments. With dry powder waiting to be invested, the funding scenario is expected to normalize in the next 2-3 quarters.
