India is currently experiencing a funding winter, a downturn in investors' confidence towards startups, which is expected to continue for the next 12-18 months, according to a report by market intelligence platform Tracxn.
The month of August 2022 witnessed $885 million in funding, 102 funding rounds and 9 acquisitions, down by 20%, 8%, 18%, respectively, compared to July 2022, the report says.
Continued learning, alternative lending, e-commerce enablers, and investment tech are the top sectors that received the most funding from investors in August 2022.
Bengaluru leads in the maximum total funding raised, followed by Mumbai and Delhi, according to the report.
Despite the funding winter, edtech unicorn UpGrad raised another big round of $210 million funding in August after raising $225 million funding in June this year. The company plans to hire 2,800 full time and part time faculty in the next three months when other big players in edtech like Unacademy, Byju's and Vedantu have collectively laid off around 2,500 employees this year. UpGrad plans to achieve $500 million in gross revenue in FY23.
Pune-based fintech startup EarlySalary is another company that raised a big amount of $110 million in August. The startup provides instant loans to young salaried individuals.
Meanwhile, payment gateway Razorpay has acquired Ezetap, a provider of point-of-sale solutions for $200 million last month to enter into offline payments.
Investors such as Beenext, LetsVenture, Accel, and Blume Ventures topped the investment charts last month.
Indian startups raised $6.9 billion in 409 funding rounds during the three months ended June 2022, according to Tracxn. Fundraising during the last three months also witnessed a decline in comparison to the same quarter last year (Q2 2021), where the total funds raised were $10.1 billion. Q3 2021 investments topped the charts with $14.8 billion in funding rounds, which hasn’t been surpassed in recent times.
As funding dries up, startups are exploring ways to become frugal. In an email to employees in July, Unacademy chief executive Gaurav Munjal said there are a lot of unnecessary expenses which the company must cut in order to turn profitable. "We spend crores on travel for employees and educators. Sometimes it's needed, sometimes it's not. There are a lot of unnecessary expenses that we do. We must cut all these expenses. We have a strong core business. We must turn profitable asap," Munjal said, adding that meals and snacks will not be complimentary across its offices.