Indian Startup Funding Plateaus In August 2022, Deals At Its Lowest In 2022

The eighth month of the year, August, has witnessed the same amount of capital inflow as it saw in the month of July. In the month of August 2022, the startup ecosystem received $1.1 Bn funding, same figure as it was in the last month.

Inc42 reported July 2022 as the worst month over the last 17 months with the lowest recorded funding at 127 deals. The number of deals plunged further in August to 101, indicating a fall of 20.4% over the last month.

After a continuous fall in startup funding since February this year, the month of June saw an uptick in the amount of funding raised. The ecosystem saw several late-stage startups such as CRED, Physicswallah, ShareChat, upGrad, Stashfin and LeadSquared raising deals above $100 Mn.

However, the number of mega deals reduced to only three in the month of August with upGrad raising another round of $210 Mn, EarlySalary raising $110 Mn and CleverTap raising $105 Mn.

The data further indicates an 84% year-on-year (YoY) fall in the late-stage funding amount and a 52% year-on-year decline in the number of late-stage deals.

The startup funding amount and deal count suffered a significant decline across all other stages as well in the month of August 2022.

On a year-on-year level, there is further observed a steep decline in both startup funding amount and the number of deals. The funding amount and deal count decreased by 73% and 32% respectively, in August 2022 compared to the previous year.

Interestingly, in the month of August, we also found Mumbai usurping Bengaluru in terms of total venture capital flow, with startups raising $585 Mn. Although Bengaluru continued to lead in the deal count with 35 deals.

Sector wise, fintech continued to be an apple of the investor’s eye in August 2022. Of the total $1.1 Bn funding raised in August 2022, fintech startups grabbed the maximum of 24.7%, followed by enterprisetech and edtech. In number of deals, fintech tops the chart, followed by enterprisetech and ecommerce.

There are no doubts about an ongoing funding slowdown in the Indian startup ecosystem. Adverse geopolitical and macroeconomic situations coupled with high valuations of Indian startups have resulted in a slowdown at the present, but these factors are set to impact funding over the next few quarters.

According to Inc42’s ‘The State of Indian Startup Ecosystem Report, 2022’, Indian startups are set to see reduced funding in 2022 and 2023 as compared to 2021. While the last year was truly a watershed moment for startup funding in the country, there are massive corrections going on in the markets around the world. Indian startup valuations and fundings are also suffering a correction, for better or worse.