VC funding in Indian startups drops 33% to $24 bn: PwC

VC funding for the Indian startups in 2022 was nearly $24 billion, a drop of 33 percent in comparison to 2021 but was still more than twice the funds raised in 2020 and 2019 each, according to the PwC India report.
Early-stage deals accounted for 60-62 percent of the total funding in CY21 and CY22 (in volume terms). Average ticket size per deal was $4 million per deal.

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

Many startups are using this time to tighten operating models and optimize their cash runway by deferring discretionary spends and investments.

The software-as-a-service (SaaS) segment witnessed an increase of 20 percent in funding values during CY22 compared to CY21 and accounted for nearly 25 percent of all funding activity.

Growth and late-stage funding deals accounted for 88 percent of the funding activity in 2022 in value terms.

Average ticket size in growth-stage deals was $43 million and late-stage deals were $94 million during 2022.

Bengaluru, Delhi-NCR and Mumbai account for nearly 82 percent of total Indian startups.

About 28 percent of the startups in the top three cities have raised in excess of $20 million.

Startup Perspectives for CY22 – A snapshot

Stages of funding: Early-stage deals accounted for 60–62 percent of the total funding in 2021 and 2022 in volume terms. Average ticket size per deal was $4 million per deal. In value terms, early-stage deals contributed to approximately 12 percent of the total funding in 2022 compared to nearly 7 percent in 2021.

Growth- and late-stage funding deals accounted for 88 percent of the funding activity in 2022 in value terms. These represented 38 percent of the total count of deals. Average ticket size in growth-stage deals was $43 million and late-stage deals was $94 million during 2022.

M&A transactions: A 17 percent decline was witnessed in M&A deals during 2022 compared to 2021 in terms of deal volume, with 60 percent of the transactions being contributed by the top three sectors – SaaS, e-commerce+D2C and EdTech. E-commerce and D2C (61) and SaaS (60) witnessed the highest number of M&A transactions during 2022.

City-wise start-up funding: Bengaluru, NCR and Mumbai account for nearly 82 percent of total Indian start-ups as of December 2022. 28 percent of the start-ups in the top three cities have raised in excess of $20 million. Bengaluru witnessed the highest number of unicorns, followed by NCR and Mumbai. Similar trends have been noted for other companies that have raised more than $50–100 million.