According to a PwC India analysis, geopolitical unrest looks to be having an impact on Indian startups as total funding fell by 40% to $6.8 billion in the April-June period.
“The decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability,” it added.
According to the PwC India study titled “Startup Deals Tracker – Q2 CY22,” early-stage deals made up more than 60% of the total with an average ticket amount of $5 million. The total capital in the Indian startup ecosystem decreased by 40% during Q2 CY22 to reach $6.8 billion after three consecutive quarters of raising more than $10 billion.
According to the research, software as a service (SaaS) and fintech startups received more than $3.1 billion in funding during the second quarter of calendar year (CY) 2022.
It went on to say that early-stage deals, with an average ticket size of $5 million, accounted for more than 60% of the entire volume of deals.
We expect the overall funding landscape to take 12–18 months to stabilise, during which it would be beneficial for startups to increase their ‘funding runway’. No matter which stage a startup is in, they would do well to keep a close tab on core business and ensure unit economics is strictly as per plan,” said Amit Nawka, Partner – Deals and India Startups Leader, PwC India.
Valuations are likely to remain under pressure across all funding stages, primarily trickling down from the significant funding slowdown in late-stage or Initial Public Offering (IPO) deals, he added.
Given that entrepreneurial activity continues to flourish with increased digitisation and the amount of venture capital funds waiting to be deployed in the Indian market, funding in early-stage deals during Q2 CY22 continued to be stable at around $800 million and could remain stable or even grow in the next few quarters, it added.
The National Capital Region (NCR), Bengaluru, and Mumbai, which collectively accounted for around 95% of all investment activity in the April–June 2022 quarter, were the next two startup cities in India, according to the research.
Seven companies in Bengaluru each raised more than $100 million in the second quarter of 2022: Dailyhunt, Rapido, Leadsquared, Lenskart, CRED, Ather Energy, and Observe.ai. These companies primarily operate in the SaaS, logi, and autotech sectors.
Seven businesses in the NCR raised more than $100 million each, including Delhivery, Stashfin, Rario, Grey Orange Robotics, Absolute Foods, Fashinza, and PhysicsWallah.
According to the article, four startups each raised more than $100 million in Mumbai. UpGrad, Zepto, CoinDCX, and Turtlemint are a few of these.
In the second quarter of calendar year 2022, only four firms in India achieved unicorn status, echoing a global trend that saw a decrease in the number of new unicorns this past quarter. Globally, there are now more than 1,200 unicorns, with the SaaS industry seeing the most operational unicorns in Q2 of FY22, followed by the finance industry.
Four new companies will join the 57 decacorns (startups valued at $10 billion) that already exist in the world during the April–June 2022 quarter.
