According to a report by PwC, domestic startup funding declined 33% year-on-year (YoY) to ₹2,400bn in CY22, compared to ₹3,500crore in CY21. However, domestic start-ups raised funds more than twice in CY22, versus ₹1,090 billion in CY20 and ₹1,280 crore in CY19.
According to the Startup Deals Tracker-CY22 report, a total of 1,021 startups in CY22 raised funds versus 1,106 startups in CY21. This reduced the average ticket size from ₹3.2 crore in CY21 to ₹2.3 crore in CY22. However, funding for early-stage startups increased by 12% compared to CY21, indicating positive investor sentiment towards domestic startups despite the global slowdown.
Early stage deals accounted for 60% to 62% of total funding in CY21 and CY22. The average ticket size was ₹4 crore per deal. By value, early-stage deals contributed around 12% of total funding in CY22, versus almost 7% in CY21.
Growth and late-stage financing businesses accounted for 88% of financing activity in FY22. These accounted for 38% of the total number of deals. The average ticket size for growth-stage deals in FY22 was ₹4.3 billion and for late-stage deals was ₹9.4 billion.
In terms of segments, funding for SaaS startups increased by 20% in CY22 compared to CY21, making them the most heavily funded sector in CY22. This was followed by startups in the areas of fintech, logistics, autotech, edtech and direct-to-consumer (D2C) startups. The five best start-ups contributed around 71% of the total financing in terms of value in KY22.
Amit Nawka, Partner – Deals & India Startups Leader, PwC India said: “Despite the funding slowdown, some areas such as SaaS and early-stage funding have remained bullish. With significant dry powder waiting to be invested, it seems likely that the funding scenario will normalize after 2-3 quarters. Until then, however, many startups are using this time to streamline operating models and optimize their liquidity by deferring discretionary spending and investments.”
The SaaS startups contributed 25% of the total funding activity in CY22 and thus saw a 20% increase in funding values in CY22 compared to CY21. The average ticket size of deals increased from ₹1.5 billion in CY21 to 1.8 crore in CY22, driven by 14 companies that managed a surplus of 10 crore in CY22. In terms of number of deals, 65% of deals in this space were driven by early-stage funding rounds, with an average ticket size of ₹4 crore in CY22.
However, amid the global layoffs and mass layoffs, e-commerce business-to-consumer (B2C) and edtech startups experienced the sharpest falls in funding, at 71% and 54%, respectively. Among the edtech startups, 50% of the funding was provided by BYJU’S, which reportedly raised £91.5m, followed by upGrad with £22.5m.
The fintech sector contributed around 20% of total funding in FY22, with a 40% decrease in funding activity compared to FY21. In terms of mergers and acquisitions, CY22 saw a 17% drop at 246 deals compared to CY21. During the year, 60% of mergers and acquisitions were contributed by the SaaS, e-commerce (D2C) and edtech sectors. The e-commerce (D2C) and SaaS sectors saw the highest number of mergers and acquisitions in FY22 at 25% and 24%, respectively.
