Indian Startup Funding Size Decreases By 20% In Last 30 Days: Funding Winter To Continue?
According to the data complied by Tracxn, the month of August for startups in India was a tough one as funding rounds declined 20 percent when compared with July 2022.
The Funding Winter is Here
As compared to the previous month, in the month of August 2022, startups witnessed $885 million in funding, 102 funding rounds and 9 acquisitions, which were down by 20 percent, 8 percent, and 18 percent, respectively compared on a month-on-month basis.
The funding winter has hit startups across stages in India. Be it growth-stage companies unable to raise new funding, or early-stage startups that have to settle for lower-than-expected valuations and fund sizes.
Tracxn said that this phenomenon is expected to continue for the next 12-18 months, wherein due to massive influx of VC fundings, Indian firms focus more on rapid growth than profitability.
It added that it was in the third quarter of 2021 that the quarterly funding peaked at $14.8 billion and since then, it has been on a steady decline.
On the flipside, India has added 19 unicorns so far this year, taking the total number of unicorn startups in the country to over 100.
Raised Funding By Companies Despite the Winter
Despite the funding squeeze, edtech unicorn UpGrad was able to raise another big round of $ 210 million funding last month after raising $225 million funding in June this year. In addition, the company aims to achieve $500 million in gross revenue in FY23.
Over the period of next 3 months, UpGrad is also planning to hire 2,800 full time and part-time faculty whereas the other edtech startups such as Unacademy, Byju’s, Vedantu laid off over 2,500 employees this year in an attempt to aggressively cut costs with demand for edtech services after witnessing hypergrowth.
In about a week, a recent report by news agency PTI says that Byju’s is likely to raise over $500 million (about Rs 3,900 crore) at a valuation of around $23 billion in about a week.
Pune-based fintech startup EarlySalary, which provides instant loans to young salaried individuals, has raised a big amount of $110 million in August.
A B2B payments company, Razorpay has acquired Ezetap, a provider of POS solutions for $200 million to enter into offline payments is a notable acquisition this month.
As per the Tracxn report, Bangalore leads in the maximum total funding raised, followed by Mumbai and Delhi, while Beenext, LetsVenture, Accel, Blume Ventures have topped the investment charts for the month of August.