The uncertainty in global markets, due to prevailing volatility in equities and geo-political headwinds, has taken a toll on Indian startup funding. Venture capital (VC) funding into Indian startups has fallen below $1 billion in the month of July, as per the data released by the data analytics and consulting company GlobalData showed. With this, July became the first month of the current calendar year 2022 when the total VC funding raised by Indian startups slipped below $1 billion.

GlobalData’s Financial Deals Database reveals that VC funding value nosedived by a massive 58.7% to $907.5 million in July, while deal volume also fell by 9.6% compared to the previous month. The cumulative announced VC funding deal volume during January to July 2022 was 1,108 while the corresponding disclosed funding value stood at $16.5 billion.

“Until recently, the largest venture capitalists and private equity players in the world were scrambling to grab a share of the Indian startup ecosystem, which was touted as a promising alternative to China. However, the harsh “funding winter” has reversed the fortunes. As a result, July is the first month of 2022 when the total venture capital (VC) funding raised by Indian startups fell below $1 billion,” GlobalData said in its report.

According to Aurojyoti Bose, Lead Analyst at GlobalData, the volatile market conditions as well as shift in investors’ focus towards sustainable business models and profitability seem to be taking a toll on the VC funding activity in India.

The report highlighted that the average deal size more than halved from $15 million in June 2022 to $7 million in July as there was a drop in the volume of big-ticket deals during the month.

India saw the announcement of only two VC funding deals valued more than $100 million in July 2022. These include the $250 million funding raised by a Gurugram-based ride-sharing company BluSmart Mobility, and $102 million raised by FPL Technologies (OneCard), a fintech startup based in Pune.

“VC funding activity has been impacted across several key markets globally due to the prevailing market volatility and geo-political headwinds, and India is not an exception to it. The trend suggests that “funding winter” may be a cyclical phenomenon, but for the time being wary investors continue to be cautious about leading the investment rounds,” Bose added.

In the first half of the current year 2022 (H1 2022), India witnessed a positive trend in both VC funding value and volume in H1 2022, compared to H1 2021, even when several other key markets such as the U.S. and China experienced a decline. India clocked a 39% year-on-year (YoY) growth in VC funding deal volume to 976 during the first half (H1) of 2022. The corresponding disclosed funding value too clocked a 4.5% rise to $15.6 billion. The big-ticket deals announced during H1 2022 include $805 million funding raised by Verse Innovation, $800 million series F funding by Think and Learn (Byju's), $700 million funding by Bundl Technologies (Swiggy), $450 million funding by Polygon, and $300 million funding raised by Xpressbees.

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