The domestic startups funding witnessed a decline of 33% year-on-year (YoY) to ₹2,400 crore in CY22, as compared to ₹3,500 crore in CY21, according to a report by PwC. However, the domestic start-ups raised funds more than twice in CY22 against ₹1,090 crore in CY20 and ₹1,280 crore in CY19.
According to the 'Startup Deals Tracker-CY22,' report, total 1,021 startups raised funds in CY22 against 1,106 startups in CY21. With this, the average ticket size slumped from ₹3.2 crore in CY21 to ₹2.3 crore in CY22. However, the funding for early-stage start-ups surged 12% as compared to CY21, indicating a positive outlook of investors towards domestic startups despite the global slowdown.
The early stage deals accounted for 60% to 62% of the total funding in CY21 and CY22. The average ticket size deal stood at ₹4 crore per deal. In value terms, early-stage deals contributed to around 12% of the total funding in CY22 against nearly 7% in CY21.
The growth and late-stage funding deals accounted for 88% of the funding activity in CY22. These represented 38% of the total count of deals. Average ticket size in growth-stage deals stood at ₹4.3 crore and late-stage deals stood at ₹9.4 crore in CY22.
In terms of segments, funding in SaaS startups surged by 20% in CY22 as against CY21, thus making it the most-funded sector in CY22. This was followed by startups in fintech, logistics, autotech, edtech and direct-to-consumer (D2C) startups. The top five startups contributed around 71% of the total funding in CY22 in value terms.
Amit Nawka, partner - deals & India startups leader, PwC India, said, "Despite the funding slowdown, some areas like SaaS and early-stage funding have remained upbeat. With significant dry powder waiting to be invested, it seems likely that the funding scenario will begin to normalise after 2-3 quarters. Until then however, many start-ups are using this time to tighten operating models and optimise their cash runway by deferring discretionary spends and investments."
The SaaS startups contributed 25% of the total funding activity during CY22, thus witnessing an increase of 20% in funding values during CY22 as compared to CY21. The average ticket size of deals increased from ₹1.5 crore in CY21 to ₹1.8 crore in CY22, driven by 14 companies raising an excess of ₹10 crore during CY22. In terms of deal count, 65% of the 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 resignation, e-commerce business-to-consumer (B2C) and edtech startups witnessed the steepest decline in funding at 71% and 54%, respectively. Among edtech startups, 50% of the funding was contributed by BYJU’S, which reportedly raised ₹91.5 crore followed by upGrad at ₹22.5 crore.
The fintech sector contributed around 20% of the total funding in CY22, with a decline of 40% in the funding activity as compared to CY21. In terms of mergers and acquisitions, CY22 saw a decline of 17% at 246 deals as compared to CY21. During the year, 60% of the mergers and acquisitions were contributed by SaaS, e-commerce (D2C), and Edtech sectors. The ecommerce (D2C) and SaaS sectors saw the highest number of M&As in CY22 at 25% and 24%, respectively.
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