We are getting a more realistic update on the Indian startup funding landscape. All numbers are in the red in the South Asian market, as elsewhere.
Indian startups raised $3 billion in the quarter ended September, down 57% from the previous quarter and down 80% year-on-year, market intelligence platform Tracxn said in a report on Tuesday. This figure is noteworthy for many reasons. Most obvious is that most top tier funds in India have difficulty raising capital. Sequoia India and Southeast Asia, Lightspeed Venture Partners, Accel, Elevation Capital, and Matrix Partners India — all raised record-high funding this year.
Second, India appears to be facing a more acute shortage of funds. Globally, funding was down 53% year-over-year and 33% quarter-on-quarter, according to data compiled by Crunchbase.
In Q3, the Indian startup ecosystem raised 334 funding rounds, up from 674 in Q3 2021. Check sizes are also getting smaller and smaller for startups at all funding stages. Late-stage startups that have raised capital, on average, he raised $42 million, according to Tracxn. That’s down more than 70% from his $142 million in the same period last year.
Investors have become cautious globally in recent months as markets reverse most of the gains from a 13-year bull market. As a result, startups are finding it increasingly difficult to raise new rounds of funding at higher valuations than previous rounds. Due diligence, largely obsolete over the last year, has made a strong comeback as most transactions take weeks, if not more, for evaluation.
SoftBank founder Masayoshi Son, who rolled out more than $3 billion in India last year, warned in August that the fundraising winter could be long as some unicorn founders are reluctant to accept low valuations. did.
I don’t think the situation will improve any time soon. Byju’s, India’s most valuable start-up, has postponed its plans to file for an IPO this year. Budget hotel chain Oyo, once valued at $10 billion, aims to go public early next year, but its biggest backer has cut its valuation to $2.7 billion.
“India is currently experiencing a slowdown in funding, which is expected to continue for the next 12-18 months, and the impact of the slowdown in funding is expected to intensify over time,” said Tracxn co-founder. , Neha Singh, said in another note. He has just applied for an IPO.
Some charts and other interesting stats from the report: