Start-up Funding drops by 80 per cent in Q3 22 to touch $14.9 billion

Tracxn, a SaaS-based market intelligence platform, released its Tracxn Geo Quarterly Report: India Tech Q3 2022. The report is Tracxn’s quarterly proprietary document that tracks the Indian start-up ecosystem by delineating the funding raised by start-ups, investors’ exits through acquisitions and Initial Public Offering (IPOs), and the broader trends in the fundraising landscape.

According to the report, Indian start-ups raised $3 billion in Q3 2022 (July-Sept), which was 57 per cent lower than the previous quarter. The average ticket size also witnessed a drop across all funding stages, with the late stage seeing the biggest fall of over 70 per cent, from $142 million in Q3 of 2021 to $42 million in Q3 of 2022. This indicates that investors are unwilling to make significant investments until economic conditions stabilise.

The top three sectors that received the maximum funding in this quarter were Alternative Lending, Genomics and Payments. Genomics is an upcoming sector with great potential but has remained untapped by investors. It saw maximum investor interest in Q3 2022, receiving over $231 million in funding, which is higher than the total funding received in 2021. 

The five companies that raised funding rounds of over $100 million in this quarter were EarlySalary, 5ire, InsuranceDekho, OneCard and BookMyShow, with the most active investors being Better Capital, Venture Catalysts and Surge. Out of the 334 funding rounds closed in Q3, the top three funding were completed by EarlySalary ($110 million), CleverTap ($105 million) and OneCard ($102 million) in Series D rounds.

Some of the other key highlights of the report include 109 start-ups closed their first funding round, 3 start-ups turned unicorns, 39 start-ups got acquired, and 2 filed for their IPOs. Molbio Diagnostics, 5ire and OneCard turned unicorns and Zopper, LifeCell, Jar, DotPe, Vegrow, Bigspoon, InsuranceDekho, CUSMAT, Airtribe and Serentica Global joined the Soonicorn club.

Speaking about the report, Neha Singh, Co-Founder, Tracxn said, “Our quarterly start-up report confirms that India is currently experiencing a funding slowdown. This is expected to continue for the next 12 to 18 months, and the effects of the funding slowdown are expected to intensify. Executives worldwide anticipate a recession in the near future and are preparing to cut costs. To add to their woes, the recent energy crisis in the UK and Europe and also the sliding GBP and EUR have increased the likelihood of a global recession.”

Bengaluru, Mumbai and Delhi-NCR were the top cities attracting maximum investments, as per the report with Blume Ventures topping the investment charts in seed-stage start-ups. Sequoia Capital ranked highest in the early-stage start-up funding and GIC led the late-stage funding.

“The Indian start-up ecosystem is still experiencing the ongoing funding slowdown and severe macroeconomic conditions gripping the West. We are seeing large PE and VC funds treading cautiously, led by significant changes in the investment environment in recent quarters. We expect this to continue until we see signs of stabilisation globally,” said Abhishek Goyal, co-founder, of Tracxn.