Despite Funding Winter, 126 Funds With $18.3 Bn Corpus Launched For Indian Startups

The start of the Russia-Ukraine war brought the party in the Indian startup ecosystem to an abrupt end. The subsequent geopolitical tensions, coupled with rising inflation and other macroeconomic factors, made investors cautious and led to a sharp decline in the funding raised by Indian startups.

While the country minted 21 unicorns in 2022, crossing the 100 unicorns mark in the process, the year was marred by funding crunch, layoffs, and shutdowns in the startup ecosystem. However, on the investor side, that was not the case.  

The year saw the announcement and launch of 126 funds, including venture capital funds, micro funds, corporate VC funds, and debt funds. These funds cumulatively raised over $18 Bn to invest in Indian startups. In comparison, 2021 saw the launch of only 61 funds, raising over $6 Bn for startup investments.

Out of the 126 funds launched in 2022, 62% are focused on early-stage startups while the remaining 38% focused on growth-stage and late-stage startups. While nearly 22% of funds are sector-agnostic, the remaining 78% are focused on varied sectors such as SaaS, healthcare, SaaS, blockchain, crypto, fintech, logistics and enterprisetech. 

Fund Size Soars 3X In 2022 Amid Funding Winter

Amid the funding winter, the funding raised by Indian startups declined 40% to $25 Bn in 2022 from $42 Bn in 2021.

As investors became cautious, the funding ticket size fell 18% to $18 Bn in 2022. However, investors kept taking calculated bets. Consequently, even as growth and late stage funding slowed down, seed and bridge stage funding grew.

Amidst all these, in an indication of investors’ confidence in the Indian startup ecosystem, the total size of the new funds launched in 2022 rose almost 3X to $18 Bn from $6 Bn last year.

Of the 126 funds, 62 VC and 5 PE funds announced and raised $13.9 Bn and $2.5 Bn, respectively, from limited partners (LPs) in 2022. 

Meanwhile, debt funds raised $818.7 Mn and angel funds raised $156.7 Mn. CVC funds secured $353.8 Mn, accelerator funds raised $121.9 Mn, and government funds $100.4 Mn. Seed funds and alternative investment funds got $9 Mn each, while fellowship fund raised $9.8 Mn and grant funds secured $2 Mn. 

A majority of these startup funds are sector-agnostic, while others are focused on sectors such as enterprisetech, environmental, social, and governance (ESG), SaaS, fintech, healthtech, crypto, blockchain and sportstech, among others.

According to an Inc42 survey, enterprisetech and fintech sectors will be the favourite of investors in the financial year 2023-24 (FY24). Besides, healthtech sector is also likely to secure a large share of funding in FY24. 

On the other hand, the ecommerce sector, which bagged $1.5 Bn in 2022, is expected to lose sheen and may see lower funding in the next fiscal.

Talking about the fund announcements and launches in 2022, here’s a list of new funds and how they will be deploying capital in homegrown startups.

Top 5 VC Funds For Startups Launched In 2022 

Sequoia India & SEA

Sequoia India and Sequoia Southeast Asia closed one of the largest VC funds worth $2.85 Bn in June this year. Of this, $2 Bn would be infused in seed-stage and growth-stage startups operating in India, while the remaining $850 Mn has been earmarked for ventures based in the South-East Asia (SEA) region.

The VC firm has over 400 India and SEA-based startups in its portfolio. Of these, 13 startups have been listed on the bourses in the past two years. 

Apart from the fund launch, the VC firm was also in the limelight due to corporate governance and other issues at its portfolio startups – BharatPe, Zilingo, Zetwerk and Trell.

Elevation Capital

The Gurugram-based venture capital firm launched a $670 Mn Fund VIII in April this year. The fund would invest between $2 Mn and  $5 Mn in early and growth-stage ventures operating in sectors including consumer tech, consumer brands, fintech, SaaS and Web3. 

The VC firm also backed multiple startups such as Country Delight, CityMall, Nanonets, Polygon, Pillow, Curelink, Sprinto, Minitifi and SuperOps.ai this year.

It has backed startups like FirstCry, Makemytrip, Meesho, NoBroker, Paytm, Sharechat, Spinny, Swiggy and Unacademy. Of these, 13 portfolio companies have entered the coveted unicorn club.

Accel

The Silicon Valley-based VC firm secured $650 Mn towards its seventh fund, the Accel India VII. The sector-agnostic fund would infuse capital in early-stage startups operating in India and Southeast Asia (SEA) regions.

Its startup portfolio includes Acko, CultFit, Mensa, MindTickle, Swiggy, Urban Company, Vedantu, among others.

In February, Accel also shortlisted 14 Indian startups, working in sectors like SaaS, healthtech, fintech, cryptocurrency, and Web 3.0, for pre-seed funding under its Atoms program.

Jungle Ventures

The Singapore-based VC firm closed its Fund IV at $600 Mn in May this year. The sector-agnostic fund comprises $450 Mn in the main fund and the remaining $150 Mn as additional commitments.

Temasek, IFC, FMO, DEG, Mizuho Bank and StepStone Group are among the investors that committed to the fund. 

Additionally, the VC firm shared that with this fund, it is managing $1 Bn of assets under management (AUM). Its portfolio companies include inFeedo, Betterplace, Leap,Turtlemint, Livspace and Moglix, among others.

SphitiCap 

The Noida-based VC firm launched a $500 Mn fund in October this year. The sector-agnostic fund also has a greenshoe option.  

The fund will infuse between $0.5 Mn to $15 Mn in early-stage and growth-stage homegrown startups operating in sectors such as cleantech, fintech, deeptech, agritech, proptech, SaaS, defense, and logistics.

At the time of the fund launch, it said that it would back about 20 startups in the December quarter of FY22 and was performing due diligence on five startups then. 

The Rise Of Private Equity Funds In 2022  

The year also saw 5 PE funds worth $2.5 Bn being announced. These funds are focused on growth-stage and late-stage startups. 

Here’s the list of PE funds that announced new funds this year: 

Xponentia Capital Partners

The Mumbai-based private equity firm raised INR 365 Cr for its second fund, Xponentia Opportunities Fund 2. The PE firm would raise an additional INR 750 Cr for the fund.

Indian corporates, high-net-worth individuals (HNIs) and family offices are among the limited partners for the fund. The fund will infuse a total of around INR 100 Cr in about 10 startups in India. 

Some of Xponentia’s portfolio companies include Flight Simulation Technique Centre, Barbeque Nation, R4Rabbit, Easy Home Finance, Medsource and Altigreen. 

The PE firm backs startups working in diverse fields such as finance, healthcare, consumer and B2B sectors. Besides that, it also focuses on startups with an EBITDA of about INR 30-35 Cr. 

OAKS Asset Management 

The Mumbai-based private equity fund secured INR 1,000 Cr for the first closure of its second fund, OAKS Consumer Fund in June this year. The fund was oversubscribed by INR 300 Cr.

The fund would focus on consumer tech and mid-sized startups in India. 

Earlier, the PE firm’s first fund, with a corpus of INR 700 Cr, backed five startups – EV startup Hero Electric, fintech startup CredAble, luxury catering company Foodlink, D2C clothing startup Shree and non-banking financial company InCred.

Jashvik Capital

The Mumbai-based private equity firm announced the first closure of its $350 fund in October this year. The fund is expected to receive final closure in July 2023. 

The fund, which received commitments from domestic and foreign investors, would invest between $10 Mn-$30 Mn in around 20 growth-stage startups operating in healthcare, pharma and consumer sectors. 

The PE firm’s portfolio includes QSR chain Devyani International, Indira IVF, Omni Active Health Technologies, Dr Lal PathLabs, Metropolis and TCNS Clothing Ltd, among others.

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