Funding in early-stage deals in Q2 CY22 continued to be stable at around USD 800 million and is likely to remain stable or even grow in the next few quarters.
After three consecutive quarters of raising more than USD 10 billion, the total funding in the Indian start-up ecosystem fell by 40% during Q2 CY22 to reach USD 6.8 billion. The decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability, as per the PwC India report titled, “Startup Deals Tracker - Q2 CY22.” Software as a service (SaaS) and FinTech companies had the highest share of funding in Q2 CY22, totaling more than USD 3.1 billion.
Early-stage deals comprised more than 60% of the total deal volumes with an average ticket size of USD 5 million. Funding in early-stage deals during Q2 CY22 continued to be stable at around USD 800 million and could remain stable or even grow in the next few quarters – given that entrepreneurial activity continues to flourish with increased digitisation as well as the quantum of venture capital funds waiting to be deployed in the Indian market.
Amit Nawka, Partner - Deals & India Startups Leader, PwC India, said, “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. 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.”
Startup Perspectives for Q2 of CY22 – A snapshot
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