The last quarter of financial year 2022-23 has proved to be a dry season for unicorns in India. According to data from Tracxn, between January and March 2023 only four unicorns raised money amid just six funding rounds.

This is a nosedive from the last quarter of FY22, where 35 unicorns raised money amid 40 funding rounds. The first three quarters of FY23 saw 23, 11 and nine unicorn funding rounds, respectively.

The value of funds raised in the last quarter, however, was slightly up at $1.16 billion, mainly after PhonePe raised $650 million through three different funding deals. In the last of these deals in Q4 FY23, it raised $200 million from Walmart. Company sources had said they plan to deploy these funds to build and scale new businesses like insurance, wealth management, lending, stockbroking, ONDC-based shopping, and account aggregators, besides supporting offerings like UPI Lite and credit on UPI.

Another company that managed to raise higher funding was Lenskart, with $500 million from Abu Dhabi Investment Authority. NoBroker and Darwinbox, too, raised $5 million each between January 1 and March 31, 2023.

How the numbers stack up

Unicorn funding peaked in Q1 FY22 when 42 unicorns raised funds through 47 deals. Cumulatively, they raised more than $5.8 billion. In the following quarter, though the number of funding rounds dipped to 46, the value of funds raised jumped to $12.22 billion. The value dipped in every quarter after that. In fact, in FY23, the second and third quarters saw fund raise of $390.28 million and $753.64 million, respectively.

Also, no start-up could achieve unicorn status ($1 billion valuation) in the last six months. The last start-up to enter the unicorn club, according to Tracxn data, was Molbio Diagnostics on September 26, 2022. FY23 saw nine new unicorns, the fewest in India in the last four financial years. As many as 54 start-ups entered the unicorn club in FY22.

The funding winter and fears of a financial crisis could be playing spoilsport. In a recent report on the Indian start-up ecosystem by Boston Consulting Group, Makemytrip’s Founder and Chairman Deep Kalra notes, “In 2022, the winds changed course, causing discomfort to the investor community and the startups. This weather is also unprecedented for many unicorns and soonicorns, who have risen in the last 5-10 years. Having seen at least two major economic crisis cycles, I advise founders to be extremely frugal, to celebrate small successes, and to focus on the basics by relying on unaided comebacks and actual network effects rather than growth at all costs.” The report also notes that only 18 out of 100 unicorns in India are profitable.