Venture capital funding of startups in India fell 30 per cent in 2022 as compared to record highs in 2021. The startups received $23.95 billion as of December 28 this year, compared with $35.46 billion last year, according to an Economic Times report attributing data from Venture Intelligence.
As investors became more cautious amid rising interest rates and fears of recession, the funding of late and growth-stage startups has slowed. The funding of Series-D and above halved to $11.70 billion in 2022 from $24.91 billion in 2021. The number of late-stage deals fell from 177 to 122.
“This year, a lot of startups haven’t raised (capital) because they are all hoping that they will grow into their future valuations and want to be priced at a premium,” said Pankaj Naik, co-head (digital and technology investment banking) at Avendus Capital, according to the ET report.
However, early-stage startups continued to be competitive. The growth-stage funding, Series B and C, were flat at $6.84 billion with 221 deals as compared to $6.82 billion from 231 deals in 2021. Content aggregator platform Dailyhunt raising $805 million was the biggest deal of 2022, followed by $700 million by Swiggy and $665 million by Byju’s.
“The sectors that will weather the storm; well, it is going to be a function of the nature of business. Sectors that are trying to overtly be reliant on customer acquisition, very high customer acquisition cost, will face headwinds. Businesses that have a long-term positive trend in ARPU and established market size, will be the flavour of the season,” said Ashish Fafadia, partner at Blume Ventures, according to the ET report.
Sequoia Capital India concluded the most deals this year with 73 transactions, which was, however, lower than the 110 deals it did in 2021. The highest number of deals were recorded in the e-commerce and fintech sectors. Investors in 2023 will focus more on profitability and fundamentals.
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