Indian startup funding hits two-year low in Q3 mirroring global trend: PwC report

Startup funding in India in the third quarter of this calendar year hit a two-year low at $2.7 billion across 205 deals, mirroring the global slowdown in funding, a PwC India report said. While a decline in funding was registered across all stages of investment -- early, growth and late -- early-stage deals were least impacted hinting that venture capital (VC) firms continue to back the Indian start-up ecosystem.

As per the PwC India report titled 'Startup Deals Tracker-Q3 CY22', early-stage deals contributed to around 21% of the total funding by value in Q3 CY22 compared to about 12% in Q2 CY22.

The report said that growth-and late-stage funding deals accounted for 79% of the funding activity in Q3 CY22 in value terms. The average ticket size in growth-stage deals continued to decline and was $32 million during Q3 CY22.


"It is tough to predict how long the slowdown in funding will last, but clearly, both founders and investors are being more selective and cautious in deal-making. In general, early-stage start-ups will be able to raise capital more easily as they are typically more insulated than late-stage deals from fluctuations in the public markets," said Amit Nawka, Partner-Deals & India Startups Leader, PwC India.

Nawka said investors had already raised a lot of capital that needed to be deployed, and this would ultimately find its way to the Indian start-up ecosystem.

As many as 38 mergers and acquisitions (M&A) deals involving start-ups were executed in Q3 CY22 -- 30 domestic, five inbound, and three outbound deals.

SaaS and edtech startups witnessed the highest number of M&A transactions at nine and seven, respectively.

Edtech company upGrad has been the top acquirer this quarter with four acquisitions -- Wolves India, Harappa Education, Exampur and Centum Learning.

Only two start-ups in India -- Shiprocket and OneCard -- attained unicorn status mirroring a global trend of a decline in the number of new unicorns in the last quarter.