Slowdown bites start-ups; Q3 2022 sees only two unicorns

New Delhi, Oct 14 (KNN) The Indian startup funding has hit a two-year low at USD 2.7 billion in the third quarter of 2022, as per a PwC India report.

The report titled titled 'Startup Deals Tracker - Q3 CY22, pointed out that only two startups in India attained the unicorn status in the July-September period of 2022, showcasing a global trend in decline in the number of new unicorns this last quarter.

“While a decline in funding is evident across all stages of investment, the early-stage deals which contributed around 21 per cent of the total funding by value in third quarter was the least affected ,”the report said.

Amit Nawka, Partner - Deals & India Startups Leader, PwC India said that "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 startups will be able to raise capital more easily as they are typically more insulated than late-stage deals fr0m fluctuations in the public markets, he said.

"However, investors have already raised a lot of capital which needs to be deployed and this will ultimately find its way to the Indian startup ecosystem," he added.

The report further pointed out that growth and late-stage funding deals accounted for 79 per cent of the funding activity in the third quarter of 2022 (value terms). Early-stage deals accounted for 70 per cent of total funding as compared to their 60 per cent share in the second quarter of 2022 (in volume terms).

Average ticket size per deal ranged fr0m USD 4–5 million per deal, it said and added that in value terms.

"Thirty-eight M&A deals involving startups were executed in Q3 CY22 - 30 domestic, five inbound and three outbound deals. SaaS and EdTech witnessed the highest number of M&A transactions during Q3 CY22 – nine in SaaS and seven in EdTech," the report said.

Edtech company upGrad has been the top acquirer this quarter with four acquisitions – Wolves India, Harappa Education, Exampur and Centum Learning, it said.  (KNN Bureau)