Startup Funding Declines 40 Per Cent In April-June, Says PwC Report

As per report, the decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability

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As per PwC report, Geo-political instability appears to be taking a toll on the Indian startups with the total funding declining by 40 per cent to $6.8 billion in the April to June quarter. The early-stage deals comprised more than 60 per cent of the total with an average ticket size of $5 million, stated in the PwC India report titled, 'Startup Deals Tracker-Q2 CY22.'

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"After three consecutive quarters of raising more than $10 billion, the total funding in the Indian startup ecosystem fell by 40 per cent during the second quarter of calendar year to reach $6.8 billion. The decline can be attributed to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability," said in the report.

Amit Nawka, partner, PwC India, in a news report quoted as saying, "We expect the overall funding landscape to take 1218 months to stabilize, during which it would be beneficial for startups to increase their funding runway. No matter which stages a startup is in, they would do well to keep a close tab on core business and ensure unit economics is strict as per plan. Valuations are likely to remain under pressure across all funding stages, primarily trickling down from the significant funding slowdown in late-stage or initial public offering."

The report also added that, "It further said that early-stage deals during Q2 CY22 continued to be stable at around $800 million and could remain stable or even grow in the next few quarters, given that entrepreneurial activity continues to flourish with increased digitization as well as the quantum of venture capital funds waiting to be deployed in Indian market."

According to the report, Bengaluru, National Capital Region (NCR) and Mumbai continue to be the key startup cities in India, together contributing around 95 per cent of the total funding activity in April to June quarter of 2022, followed by Chennai and Pune. In Bengaluru, more than $100 million was raised by seven companies each in the second quarter of 2022 which includes, Dailyhunt, Rapido, Leadsquared, Lenskart, CRED, Ather Energy and Observe.ai, majorly across the SaaS, logi and autotech space.