Private equity (PE) and venture capital (VC) investments into Indian firms dipped by 29% year-on-year (YoY) to $46 billion across 1,261 deals in 2022, according to a recent report by market research firm Venture Intelligence. Local companies had garnered about $65 billion in PE-VC investments across 1,362 deals in 2021.  

The count of mega deals—transactions amounting to over $100 million (all corporate deals including startups) dropped to 111 in 2022 compared to 152 such big sized investments in 2021. The combined value of the 111 deals stood at $31 billion. In 2021, the mega deals fetched some $50.3 billion. Qatar Investment Authority's $1.5 billion investment in the new media and consumer technology-focused platform Bodhi Tree (co-created by media veteran Uday Shankar and James Murdoch's Lupa Systems) was the largest in 2022. This was followed by the $1.1 billion investment into publicly listed YES Bank by global PE investors Carlyle Group and Advent International. The IT & ITeS segment, which accounted for about $20.4 billion of the total PE-VC investment pie in 2022, saw its share of investments dip by about 51% YoY.

In the startup space, VC investments declined to $24 billion in 2022 compared to investments of $35.4 billion that new-age firms attracted in 2021. Total funding into unicorn startups in particular stood at $9.8 billion last year which translates into a 61% YoY decline over 2021 when unicorn firms pocketed $25 billion in investments from startups. Fintech and e-commerce sectors attracted more than $5 billion in VC funding each in 2022, while investors backed enterprise software startups with funding worth some $4.8 billion. “India minted a total of 21 unicorn companies (VC-funded startups valued at $1 Billion or more) in 2022, 18 of them during the first six months of 2022 and less than half the 44 Unicorns minted in 2021. In fact, the final quarter of 2022 did not see any new unicorns being created. SaaS companies accounted for 29% of all the new unicorns in 2022, followed by fintech companies with 19%,” analysts said in the report.

A shaky global macroeconomic scenario marked by steep interest rates adversely impacted the cost of capital, nudging investors to assume a cautious posture and go slow on funding new ideas.

Sequoia Capital India was the most active VC investor in 2022 with 73 investments (including new and follow-on investments), followed by Accel India and Better Capital with 57 investments each. Tiger Global took third place with 50 investments.

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