Start-up funding dips 33% YoY in CY22, early-stage funding grows: PwC India

The SaaS segment witnessed a 20 per cent increase in funding during CY22 compared to CY21 and accounted for nearly 25 per cent of all funding activity this year

Start-up funding in the country fell 33 per cent year-on-year (YoY) in calendar year 2022 (CY22) to $23.6 billion from $35.2 billion in the previous year, according to PwC India’s Start-up Deals Tracker — CY22 report.
 

This was still more than twice the funds raised in CY20 and CY19. The two years saw Rs $10.9 billion and Rs $12.8 billion in funding, respectively.
 

Early-stage funding, however, saw a 12 per cent increase this year compared to CY21. It accounted for 60-62 per cent of the total funding in terms of volume.
 

In terms of sectors, software as a service (SaaS) witnessed a 20 per cent increase in funding during CY22 and accounted for nearly 25 per cent of all funding activity this year.
 

“Despite the funding slowdown, some areas like SaaS and early-stage funding have remained robust. 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, many start-ups are using this time to tighten operating models and optimise their cash runway. They are deferring discretionary spends and investments,” said Amit Nawka, Partner — Deals and India Start-ups Leader, PwC India.

SaaS leads the way

• 21 start-ups attained unicorn status in CY22. As of December 31, 2022, SaaS continued to lead with the most number of unicorns at 20, followed by FinTech at 16
• 246 M&A deals involving start-ups were executed in CY22, a 17 per cent decline compared to CY21 in terms of deal volume
• The steepest decline in funding during CY22 was witnessed in e-commerce business-to-consumer (B2C) at 71 per cent and EdTech at 54 per cent