Funding in Indian start-ups has dropped by 35 per cent to $24.7 billion in 2022 Year to date (YTD) from $37.2 billion in the same period last year, according to Tracxn Geo Quarterly Report: India Tech 2022.
The significant drop in funding is attributed to a decline in late-stage investments, which fell by 45 per cent from $29.3 billion in January-November 2021 to $16.1 billion for the same period in 2022. Seed stage rounds are also experiencing a contraction and have dropped by 38 per cent compared with the previous year.
“Rising interest rates and fears of global recession have led to investors becoming more risk-averse, continually slowing down the funding momentum in the Indian start-up ecosystem. The funding winter, which began in Q4 of 2021, will persist in 2023 as well,” said Neha Singh, Co-Founder, Tracxn.
The number of big-ticket — $100+ million — funding rounds has also seen a 35 per cent drop YoY from 85 to 55. In terms of funding in specific sectors, the fintech funding has dropped 57 per cent as the sector was disrupted by the ban on loading PPIs from credit lines imposed by RBI. Funding in the ed-tech sector, too, dropped by 39 per cent YoY due to a fall in demand post-pandemic.