Indian startups flourished in terms of fundraising in 2021 and the show continued until the first quarter of this year. However, the second quarter turned out to be a low funding period as it missed large cheques that were quite frequent in the three months period. The same period also saw mass layoffs, consolidations and shutdowns as funding prospects continued to appear bleak.
More than 940 startups raised nearly $20 billion in the first half of 2022 or H1 2022, as per our data tracking platform Fintrackr. This includes $12 billion in Q1 and $7.8 billion in Q2 2022 which depicts a 34% decline in quarter-on-quarter funding.
It’s worth noting that, Indian startups had raked in $12.67 billion in the first six months of 2021 or H1 2021. However, they managed to raise more than double in the latter half. The current run rate of fundraising is on par with the previous year which saw $38 billion in total funding.
In Entrackr’s half yearly funding report, here are details of the top deals in both the growth stage and early-stage investments for the January to June period.
Top 25 growth stage deals
Dailyhunt’s parent Verse Innovation, edtech giant Byju’s, foodtech decacorn Swiggy, decentralized ethereum scaling platform Polygon, conversational automation platform Uniphore and AI startup Fractal remained the top fundraiser in the H1 2022 followed by Eruditus, Delhivery, ElasticRun, XpressBees. Notably, the top five startups in the list alone raised over $3 billion out of the total funding.
During Q2, Rapido’s $180 million round led by Swiggy, CRED’s $140 million, Coin DCX’s $135 million and Ather Energy’s $128 million were some of the top-funded startups.
The details of all 944 deals can be found here.
Top 25 early-stage deals
This year, a couple of Indian startups in their early stage also raised large rounds. This includes $120 million round raised by cricket NFT platform Rario, $50 million round by e-commerce rollup startup GOAT Brand Labs and $42 million round raised by game streaming startup Loco.
During the period, 131 startups, mainly in their early stages, did not disclose the details of their financing round.
Unicorns of 2022
Like 2021, the first quarter also saw new unicorns at the same pace. As per media reports, 14 startups including Games24x7, Oxyzo, CommerceIQ, Amagi, CredAvenue, Livspace, XpressBees, Uniphore, Hasura, LEAD, Mamaearth, Fractal, DealShare, Darwinbox have entered the unicorn club in Q1 2022.
However, the next quarter or Q2 added only four startups – Open, PhysicsWallah, Purplle and Leadsquared to the coveted club, taking the total list to 18 in H1 2022. In the previous year, 43 startups had achieved the feat.
Entrackr has also prepared a comparison chart to see the overall difference between the two quarters of 2022.
The reason behind less number of unicorns and larger rounds could be the shift in interest from heavyweight backers such as Tiger Global and SoftBank which emerged as chief unicorn makers in 2021. While SoftBank had already announced that it will slash its investment in 2022, New York-based Tiger Global which reported a massive $17 billion loss during the January-April period has been focusing on writing low-ticket cheques. In May, Entrackr reported that Tiger has stayed away from leading larger rounds. And, the trend has continued till the end of June.
City and segment-wise deals
As usual, Bengaluru was on top in terms of the number of startup deals and the amount raised in the January-June period. The startups based out of the city scooped up nearly $10 billion across 396 deals or 50% of the total amount raised in the period. During the Q2, Delhi-NCR-based startups raised over $4 billion across 227 deals followed by Mumbai, Chennai and Hyderabad with 140, 46 and 37 deals respectively.
The complete breakdown of deals across cities and segments in the first half can be seen below:
Unsurprisingly, fintech was the top segment in terms of the number of funding in H1 2022 with 139 deals followed by SaaS, D2C brands, healthtech and edtech.
Like funding, the ESOP buyback and sale activities were quite frequent in the first quarter as 18 startups across had bought back ESOP worth $100 million held by their employees as of April. In the second quarter, Razorpay, Swiggy, Headout and ITLITE announced their ESOP buyback programs.
As per Fintrackr’s data, more than 20 startups across stages have announced ESOP buyback worth around $200 million in the first six months of 2022 or H1 2022. Last year, the total buyback was worth around $440 million.
The merger and acquisition activities have also surged in 2022 as we saw 138 mergers and acquisitions deals. Out of these, 84 deals were done in the first quarter. Fintrackr has featured top 10 acquisitions in Indian startups in terms of deal size which include the acquisition Blinkit by Zomato and Pickrr by Shiprocket worth $568 million and $200 million respectively.
VC funds come to rescue amid layoffs and shutdowns
As per Entrackr’s sources, several startups such as Meesho, Udaan, Groww, Slice, and Unacademy have extended their timeline for the next fundraise. While early stage startups are yet to see a downturn as far as funding is concerned, sources assert that they are likely to feel the heat in H2.
Since investors are anticipating a long funding winter, the ecosystem has been seeing mass layoffs across growth and early stage startups. More than 11,000 employees have lost jobs whereas nearly half a dozen companies have shut down or are on the verge of closing their operations in the past six months. This includes more than 600 layoffs in Byju’s-owned WhiteHat Jr and Toppr, over 600 firings in Unacademy and Vedantu each. Cars24, Meesho, Udaan, Rupeek, MPL, Frontrow, mFine among others also joined the list.
Edtech company Udayy, Lido, SuperLearn, and Crejo.Fun shuttered their operations due to funding crunch. Moreover, several companies are forced to pause their new initiatives and shut down loss-making verticals. For context, Tiger Global-backed Unacademy dropped its K-12 ambition as the company didn’t manage to figure out a sustainable model. Similarly, ride-hailing company Ola had to shut down its used car marketplace Ola Cars and quick commerce platform Ola Dash.
But not all hope is lost. Around 17 India-focused funds have announced or are in the process of launching their new fund. Fintrackr has collated the data of such funds through media reports.
Venture capital firm Sequoia Capital announced its $2 billion worth fund to invest in growth stage startups while Accel also closed a $4 billion worth global fund which also includes India. Elevation Capital, Matrix Partners, Jungle Ventures, Lightspeed, and a clutch of smaller funds are also joining the list to invest in India.
Importantly, 15 out of 17 funds have been announced in the second quarter of 2022.
Update: The post has been updated to reflect Q2 funding at $7.86 billion.