VC funding in India down 30 per cent in 2022: Venture Intelligence

As compared to record highs of 2021, venture capital funding of startups in India fell 30 per cent in 2022. The startups picked $23.95 billion as of December 28 this year. In 2021, this was $35.46 billion, a report in the Economic Times (ET) said, citing data from Venture Intelligence. 

The funding of late and growth-stage startups slowed down as private market investors became more cautious amid rising interest rates and fears of recession. The funding of Series D and above halved to $11.70 billion in 2022 from $24.91 billion in 2021. The number of late-stage deals fell from 177 to 122.

"This year, a lot of startups haven't raised (capital) because they are all hoping that they will grow into their future valuations and want to be priced at a premium," Pankaj Naik, co-head, Digital and Technology Investment Banking, Avendus Capital, told ET.

The early-stage segment, however, continued to be competitive. The growth-stage funding, Series B and C, were flat at $6.84 billion with 221 deals as compared to $6.82 billion from 231 deals in 2021. 

Content aggregator platform Dailyhunt raising $805 million was the biggest deal of 2022. It was followed by $700 million by Swiggy and $665 million by Byju's.

With 73, Sequoia Capital India concluded the most deals this year. However, it was lower than the 110 deals it did in 2021. The highest number of deals were recorded in the e-commerce and fintech sectors. 

In 2023, investors will focus more on profitability and fundamentals.

"The sectors that will weather the storm; well, it is going to be a function of the nature of business. Sectors which are trying to overtly be reliant on customer acquisition, very high customer acquisition cost, will face headwinds. Businesses which have a long-term positive trend in ARPU and established market size, will be the flavour of the season," Ashish Fafadia, partner, Blume Ventures told ET.