Merge, acquire, survive: Startups on consolidation route as funding slows

49 M&A deals in the first quarter of 2023 already as consolidation continues in the ecosystem

Upcoming companies are focusing on profitability and unit economics to stay afloat amid a funding winter, prompting consolidation by way of mergers and acquisitions (M&A).

Funding for Indian startups in 2022 fell 33 per cent year-on-year compared to 2021, according to a PwC report. Overall funding slipped another 75 per cent year-on-year (YoY) in the first quarter of calendar year 2023 to $2.8 billion.

As funding slows down due to macroeconomic headwinds, many startups across sectors are changing their strategy to reduce cash burn. The change is reflected in retrenchments and overhauls in cost structures.

In this capital-starved environment, M&A