Despite slowdown in startup funding, India continues to be the third largest tech start-up ecosystem globally, with over 1,300 active tech start-ups added in CY2022, according to a report produced by NASSCOM in collaboration with Zinnov, a management consulting firm.
According to the report, India added the second highest number of Unicorns in the world, with over 23 added in CY2022. Simultaneously, the potential pipeline of Unicorns expanded to over 170, growing at a pace equivalent to 2021.
“While total funding in CY2022 dropped 24 per cent over 2021, the annual investments at $18.2 billion in CY2022 were higher than the pre-pandemic levels of $13.1 billion in 2019,” as per the report.
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The year also witnessed a significant investment focus on non-unicorns and unique start-ups. Almost 1,400 unique start-ups received funding in 2022, 18 per cent higher than in 2021. Amongst these, 47 per cent of start-ups raised their first round in 2022.
Despite the slowdown, 2022 emerged as the year that witnessed the highest seed and early-stage investments between 2019 and 2022.
A breakdown
The study reveals that both early-stage ($5.9 billion in CY2022) and seed-stage ($1.2 billion in CY2022) investments grew between 25 per cent -35 per cent over 2021. In 2022, tech start-ups in the seed-stage secured 1,018 investments.
Late-stage investments bore the brunt with a decline of 41 per cent in deal sizes greater than $100 million. This was due to considerable correction in the global public markets, particularly in technology stocks that saw a significant drop in valuation.
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Non-unicorns received 66 per cent of the total investments in CY2022. 2022 saw 30 per cent higher corporate participation compared to 2021. Over 300 corporates are actively investing, acquiring, or partnering with tech start-ups. The year also witnessed a shift in the founder’s playbook. 30 per cent of Unicorns and Potential Unicorns invested, acquired, or actively collaborated with other start-ups in H12022.
Debjani Ghosh, President, NASSCOM, said, “Navigating from an era of abundance to the era of constraints, the Indian tech start-ups need to look beyond valuations to value creation and scaling up. Despite the current downturns, opportunities abound for innovative companies that are leveraging emerging technologies to create actionable impact while prioritizing business fundamentals over growth.”