Startup Funding Dropped 49% For Delhi NCR Startups In 2022

Over the last couple of years, although the Indian startup ecosystem has grown beyond a few top metro cities to enter tier 2 and 3 cities of the country, the funding inflow is still concentrated in the top three startup hubs – Bengaluru, Delhi and Mumbai.

Take Bengaluru for instance, despite the funding winter of 2022, the city remained at the forefront of attracting the overall startup funding during the year. Further, even though funding activities in Delhi-NCR declined 49% year-on-year (YoY), highest among the top three startup hubs, the region was able to secure the second place, according to the data compiled by Inc42.

The startups based in Delhi-NCR raised $5.2 Bn in 2022, as compared to $10.2 Bn in 2021. In terms of average ticket sizes in 2022, Delhi-NCR stood at $16 Mn, down 27% year-on-year. Further, the total number of deals in Delhi-NCR region declined 12% YoY to 398 in 2022.

It is pertinent to mention here that the startups based in Delhi-NCR have raised $40.02 Bn and minted 36 unicorns since 2014.

Sector-Wise Breakup Of Startup Funding In Delhi-NCR Region

In sync with the national trend, fintech remains the top-funded sector in Delhi-NCR region. The country’s fintech sector secured the top spot in the startup ecosystem in 2022, with $4.5 Bn raised across 250 deals, despite several difficulties related to mounting business losses, layoffs, and regulatory hurdles.

According to Inc42, Delhi-NCR recorded 60 fintech deals and raised $1.3 Bn during the year. While Delhi-NCR minted four unicorns during the year, New Delhi-headquartered OfBusiness’ financial arm Oxyzo became the 98th unicorn after raising $200 Mn in one of the largest Series A rounds in the country.

The ecommerce sector in India raised $4 Bn across 310 deals, and Delhi-NCR startups raised $1.3 Bn raised across 105 ecommerce deals. While Bengaluru remained at the forefront of ecommerce funding, Delhi-NCR secured more early-stage funding.

Gurugram-headquartered epharmacy startup Tata 1Mg and SaaS-based logistics startup Shiprocket were the other two unicorns that emerged from the region in 2022.

Among some of the other major deals, Thrasio-style investment startup UpScalio raised $42.5 Mn in a Series A round and D2C electronics brand boAt raised around $61 Mn in 2022.

Will Delhi’s Startup Policy Boost The Startup Ecosystem In The Region?

In May 2022, CM Arvind Kejriwal announced the Delhi Startup Policy, which comprises a set of initiatives to ease entrepreneurship to make it India’s startup capital.

“We have taken a lot of steps to create an environment of business in Delhi-NCR. We have introduced a lot of provisions to introduce entrepreneurship in the capital,” Kejriwal said during the announcement.

He said that the government, with its startup policy, would not only help startup founders financially but also in many other ways, including ease of doing business.

More significantly, the Delhi government said that it would subsidise basic amenities such as internet and rent for office space. Further, the startups would also be helped to pay the salaries of their staff if need be, along with a credit line to access collateral-free loans, with the first year being interest-free.

In some of its other important initiatives, the Delhi government created a task force consisting of 20 people, including one government official, three from academia, and the remaining from the industry. This task force was created to keep an eye on the startups mushrooming from the region, scrutinise, and register them.

In August, the Delhi government started the consultation process of the policy, which saw participation from startups such as Swiggy and Sharechat, and the top executives of venture capital firms Sequoia Capital and Indian Angel Network.

Can Delhi-NCR Be The Next Bengaluru For Startups?

While the Delhi government has been trying to boost the startup ecosystem, there are many reasons to believe – however, not with extreme certitude – that the region can outdo Bengaluru to become the startup capital of India.

According to the country’s annual Economy Survey of 2022, Delhi NCR had the highest number of startups. “Over the recent years, Delhi has replaced Bangalore [Bengaluru] as the startup capital of India. Between April 2019 and December 2021, more than 5,000 recognised startups emerged in Delhi versus 4,514 startups in Bangalore,” the Economic Survey said.

Although Bengaluru has been unquestionably the pioneer in the startup ecosystem of India, there are several factors that are driving the growth of Delhi-NCR as a startup hotspot. For example, the region has many premier educational institutes, which offer a great talent pool. Further, commercial real estate cost in Delhi-NCR is much more reasonable than in Bengaluru.

Further, looking at the overall city infrastructure, including transportation, Delhi-NCR has an upper hand compared to Bengaluru.

Despite the positives, Delhi-NCR has a long way to go in becoming the startup capital of India. This is because Bengaluru has a bigger talent pool to offer, along with a more conducive business environment. Moreover, the Karnataka government has many initiatives in place to safeguard investors’ interest in the state’s ever-growing startup economy.

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