Early-stage startup funding defies trend, despite a 33% fall: Latest PwC India report

Indian startups funding has an interesting story. According to latest PWC India report, the startup funding faced a decline in funding in 2022 according to a report titled “Start-up Deals Tracker – CY22”. Start-ups in India raised a total of $24 billion in 2022, a drop of 33% from the $35 billion raised in 2021.

However, the funding raised in 2022 was twice that raised in 2020 and 2019, which were $10.9 billion and $12.8 billion respectively. The number of start-ups that raised funds in 2022 was 1,021, an 8% decline from the 1,106 in 2021. As a result, the average deal ticket size decreased from $32 million in 2021 to $23 million in 2022.

Despite the slowdown in startup funding, some areas such as software-as-a-service (SaaS) and early-stage funding remained strong.

SaaS was the most startup funded sector of 2022, growing by 20% to $6 billion, accounting for 25% of the total funding. Media and entertainment also saw growth in funding activity during 2022. The sharpest decline in funding was seen in the business-to-consumer ecommerce and edtech sectors, which fell by 71% and 54% respectively.

Startup Funding in India – Early Stage Funding Grows by 12%

The report also highlighted that early-stage funding grew by 12% compared to 2021, indicating that despite the global slowdown, investors remain optimistic about the Indian start-up ecosystem.

Early-stage deals accounted for 62% of total funding in 2022, with an average ticket size of $4 million. Growth- and late-stage funding deals made up 88% of funding activity in 2022 in terms of value.

The cities of Bengaluru, Delhi-NCR, and Mumbai continued to be the key start-up cities in India, representing 88% of total start-up funding activity in 2022.

When it comes to M&A activity, the report found a 17% decline in deal volume in 2022 compared to 2021. Around 246 M&A deals involving start-ups were executed in 2022, with SaaS, ecommerce, D2C, and edtech sectors attracting the highest number of transactions. The cities of Mumbai, Bengaluru, Delhi-NCR and Pune were the top cities for M&A transactions.

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