The decrease in funding value was attributed to the reduction in the number of funding rounds, which dropped to 298 in H1 2023 from 729 in H1 2022.
Startup funding for H1 2023 was at its lowest in the last four years, amounting to $3.8 billion. This figure was also 36 per cent lower than the corresponding period in the previous year, according to the report “Startup Perspectives H1 CY23” by consulting firm PwC India.
The decrease in funding value was attributed to the reduction in the number of funding rounds, which dropped to 298 in H1 2023 from 729 in H1 2022. The average investment size per deal stood at $4 million.
Out of the 298 deals, early-stage deals accounted for 57 per cent of the funding deals in the first half of the year while the remaining portion went to growth and late-stage deals.
In terms of value, growth and late-stage deals constituted around 84 per cent of the total $3.8 billion funding. Among these, growth-stage investments reached $1.98 billion, while late-stage investments amounted to $1.19 billion. Notably, there was a significant disparity in the average ticket sizes, with growth-stage deals averaging $19 million and late-stage deals averaging $52 million.
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“During the last few quarters, investors have supported their portfolio companies by doubling their investments into companies that are showing good growth but have decided to stay away from inducting new investors due to adverse market conditions,” the report said.
SaaS, D2C, fintech, e-commerce, and D2C saw the most success in securing investments in the first half of 2023, accounting for 89 per cent of the total investments received during that period.
Interestingly, funding activity during the first half of CY23 saw a significant increase, nearly three times that of H2 CY22. Furthermore, there was more growth- and late-stage deals in H1 CY23 compared to H2 CY22, which saw a higher percentage of early-stage rounds. Average ticket sizes also increased from $8 million in H2 CY22 to $43 million in H1 CY23.
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Bengaluru, Delhi-NCR, and Mumbai emerged as the top destinations for attracting startup investments, accounting for 83 per cent of the total value of investment activity during the period.
On the Indian startups’ investment outlook, Amit Nawka, Partner, Deals and India Startups Leader, PwC India, said that a funding winter is just a season in a startup’s journey. “There is a slowdown in startup funding despite significant untapped capital reserves held by venture capitalists (VCs). Active VC firms in India have secured new funds in the past year and we can expect the pace of investments to pick up in the next few months.”
https://www.financialexpress.com/industry/sme/msme-startup-funding-declined-by-36-per-cent-in-h12023-lowest-in-four-years-pwc-report/3163757/
