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    Home / News / Business News / Winter is here for start-ups and it's not going away
    Business

    Winter is here for start-ups and it's not going away

    Winter is here for start-ups and it's not going away
    Written by Athik Saleh
    Oct 14, 2022, 12:36 pm 2 min read
    Winter is here for start-ups and it's not going away
    Start-up funding is at a two-year low in India

    We have been hearing about India's tough start-up landscape. Now, we have figures to support that. According to a report by PwC India, the funding in Q3 stood at $2.7 billion, 80% less than the previous year. This is the lowest in the last two years. The funding trend in India is a mirror image of what's happening all over the world.

    Why does this story matter?

    • It is start-up funding winter in India. If you didn't believe it before, the Q3 numbers will certainly hit the nail on the head.
    • After riding the bull for so long, this crunch environment might feel new for most start-ups.
    • What's worrying is that they may have to get used to it, as the funding crunch will stay put for a while.

    Only 2 start-ups attained unicorn status in Q3

    Start-up funding in India in Q3 CY22 saw a 57% decline from the previous quarter. There were 205 completed deals in the quarter. The decline in valuations has increased the number of mergers and acquisitions in India. There were 38 M&As with start-ups involved. In the quarter, only two start-ups attained unicorn status. Funding rounds also went down from 674 to 334 year-over-year.

    Early-stage start-ups accounted for 70% of funding volume

    Early-stage start-ups felt the least bit of crunch in the third quarter. They contributed 21% of the total funding, while late-stage start-ups accounted for 79% of the funding. In volume terms, early-stage start-ups accounted for 70% of total funding compared to 60% from the previous quarter. An increase in funding for early-stage start-ups can be attributed to the lack of risk present.

    Global start-up funding has declined by 57% year-over-year

    The funding crunch can be found in the global start-up scene as well. Internationally, the funding was down 33% quarter-over-quarter and 57% year-over-year. Investors have become cautious about spending their money. As a result, start-ups are finding it hard to raise sums around the world, especially at a valuation higher than that of the previous rounds.

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