We’re getting a more realistic update on the startup financing landscape in India, and as is the case elsewhere, all numbers are red in the South Asian market.
Indian startups raised $3 billion in the quarter ended September, down 57% from the previous quarter and 80% year-over-year, market intelligence platform Tracxn said in a report on Tuesday. The numbers are remarkable for many reasons, the most obvious of which is that startups are finding it difficult to raise capital at a time when most of the top funds in India – Sequoia India and Southeast Asia, Lightspeed Venture Partners, Accel, Elevation Capital, Matrix Partners India – raised record amounts this year.
Second, the financing crisis in India appears to be more acute. worldwide, funding decreased 53% year-over-year and 33% quarter-over-quarter, according to data collected by Crunchbase.
In the third quarter, the Indian startup ecosystem undertook 334 funding rounds, up from 674 in the third quarter of 2021. The checks are also getting smaller for startups at all funding stages. Late-stage startups that have raised capital have raised an average of $42 million in funding, down more than 70% from $142 million in the same period last year, Tracxn said.
Global investors have become cautious in recent months as the market reverses most of the gains from the 13-year bull cycle. As a result, startups are finding it increasingly difficult to attract new funding rounds at a higher valuation than the previous round. Due diligence, which largely went out of style last year, has yielded strong returns as most deals review weeks if not longer.
Masayoshi Son, founder of SoftBank, which put in more than $3 billion in India last year, warned in August that the financing winter could prolong as some unicorn founders are unwilling to accept lower valuations.
It doesn’t look like there will be any improvement anytime soon. Byju’s, India’s most valuable startup, has postponed its plans to go public this year. Budget hotel chain Oyo, once valued at $10 billion, plans to go public early next year, but the largest lender has reduced its valuation to $2.7 billion.
“India is currently experiencing a funding slowdown that is expected to continue for the next 12-18 months and the effects of the funding slowdown are expected to increase in the future,” said Neha Singh, co-founder of Tracxn, who on a separate note just issued a statement. IPO applied for.
Some charts and other interesting statistics from the report: