Wednesday, March 15, 2023

Study: VC funding for Indian businesses falls to $26 billion in '22

VC funding for desi startups drops to $26bn in ’22: Study

 NEW DELHI: Indian startups now receive $25 in VC (venture capital) funding. 7 billion from $38 in 2022. 5 billion in 2021 as investors were encouraged to delay investing in new age businesses by the global economic downturn. According to a joint study published by Bain and the Indian Venture and Alternate Capital Association (IVCA), funding for high cashburn consumer technology businesses decreased by 55% year-over-year to less than $10 billion in 2022.

Even though small deals remained strong, big deals worth more than $100 million, for which startups frequently rely on outside funding, suffered. From 92 in 2021, the number of larger deals fell to 48 in 2022. Global investors were cautious about large-ticket deals, which was a key factor in deal size compression, analysts stated. There was a significant drop in mega rounds of more than $100 million.

As they struggled to raise additional capital to fund their burn, many unicorn startups, such as Byju's, Unacademy, and ShareChat, which saw their valuations soar amid the high levels of crowdfunding, laid off employees and implemented cost-cutting measures. Up to 20,000 startup employees may have lost their jobs last year, according to Bain's estimates. The cost of capital rose sharply as a result of global central banks' efforts to contain high inflation, resulting in a funding freeze.

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