India's startup funding in 2022 double the pre-pandemic level: PwC

21 startups entered the unicorn club in 2022, highest from SaaS category

Indian startup funding in 2022 was double the pre-pandemic level, according to the consultancy firm PwC. Compared to $12.8 billion in 2019, startups in India raised $24 billion in the calendar year 2022 (CY22). However, it was 33 per cent less than the $35 billion raised in 2021 (CY21).

According to "India startup deals tracker CY22", released on Wednesday, the e-commerce startups operating in the business-to-commerce (B2C) space were the fastest to achieve the status of "unicorns". A unicorn has a valuation of over $1 billion. Moreover, the number of new unicorns halved in CY22 to 21 from 42 in CY21. 

The highest number of new unicorn startups were in SaaS (6), followed by fintech (4) and logistics & Autotech (3). 

A significant decline was noticed in the late-stage funding. Compared to $12.6 billion in CY21, the late-stage funding fell to $6.5 billion in CY22. On the other hand, the funding in the early stage rose 12 per cent from $2.5 billion to $2.8 billion during the same period. The growth stage funding also slowed from $20.2 billion in CY21 to $14.3 billion in CY22.  

Out of the total funding in CY22, 71 per cent was taken by five sectors: service (SaaS), fintech, logistics & Autotech, edtech and direct-to-consumer (D2C). SaaS and fintech accounted for one-third of all the funding in CY22. The funding for SaaS, which grasped the highest funding (25 per cent) in the year, was up 20 per cent compared to CY21. 

Another sector that saw a rise in funding activity was media and entertainment. 

"Media and entertainment showed an increase in the funding activity by 6 per cent during CY22 compared to CY21. Dailyhunt raised nearly $890 million in CY22 which contributed to 55 per cent of the funding in this sector during the year," the report said. 

All the major sectors, including fintech, edtech, D2C, and online gaming, saw a decline in funding in CY22.  

The report added that Bengaluru, NCR and Mumbai represented 88 per cent of the total startup funding activity in CY22. These also had 82 per cent of all the startups in India. 

"Despite the funding slowdown, some areas like SaaS and early-stage funding have remained upbeat. With significant dry powder waiting to be invested, it seems likely that the funding scenario will begin to normalise after 2-3 quarters. Until then however, many startups are using this time to tighten operating models and optimise their cash runway by deferring discretionary spends and investments," said Amit Nawka, partner of deals and India startups leader at PwC India.