Until recently, the largest venture capitalists and private equity players in the world were scrambling to grab a share of the Indian startup ecosystem, which was touted as a promising alternative to China. However, the harsh “funding winter” has reversed the fortunes. As a result, July is the first month of 2022 when the total venture capital (VC) funding raised by Indian startups fell below $1 billion, reveals GlobalData, a leading data analytics and consulting company.
An analysis of GlobalData’s Financial Deals Database reveals that VC funding value nosedived by a massive 58.7% to $907.5 million in July while deal volume also fell by 9.6% compared to the previous month.
The cumulative announced VC funding deal volume during January to July 2022 was 1,108 while the corresponding disclosed funding value stood at $16.5 billion.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “In addition to the volatile market conditions, investors’ shift in focus towards sustainable business models and profitability seem to be taking a toll on the VC funding activity in India.”
The average deal size more than halved from $15 million in June 2022 to $7 million in July as there was a drop in the volume of big-ticket deals during the month.
India saw the announcement of only two VC funding deals valued more than $100 million in July 2022. These include the $250 million funding raised by BluSmart Mobility, and $102 million raised by FPL Technologies (OneCard).
Bose concludes: “VC funding activity has been impacted across the several key markets globally due to the prevailing market volatility and geo-political headwinds, and India is not an exception to it. The trend suggests that “funding winter” may be a cyclical phenomenon, but for the time being wary investors continue to be cautious about leading the investment rounds.”
