Indian startup funding falls below $1 Bn in July: Entrackr Report

The uncertainty ruling global markets has affected Indian startup funding too, as startups found themselves unable to convince investors to move faster during this period. That has shown up in the numbers for July during which the total investment fell below the $1 billion mark, a new low for 2022.

Home grown startups have managed to raise $870 million across 118 deals in July, according to our data tracking platform Fintrackr. This comprises 14 growth stage deals and 104 early stage deals. This is the lowest funding month of 2022 and the second lowest since January 2021 when the total funding was recorded at $807 million. 

The current year kicked off on a good note when the total funding in startups was recorded at $4.6 billion in January and $12 billion in the first quarter. However, the second quarter saw a steep fall to $7.86 billion in total funding including $3 billion in June across 145 deals.

This is more than 70% decline in month-on-month funding. The full chart can be seen below:

In July, the total funding could go further down as OneCard’s $100 million and Fi’s $45 million have not been announced by the companies yet. The two deals were reported exclusively by Entrackr through their regulatory filings. Both companies may receive more funds in the same rounds. As per Fintrackr’s estimates, OneCard has entered the unicorn club while Fi scooped up the new tranche at over $500 million valuation.

In this monthly funding edition, Entrackr has prepared the top 10 list of growth and early stage startups along with their valuation number and lead investors.

Top 10 growth stage deals

OneCard was the top fundraiser in July followed by $80 million raised by LifeWell, the merged entity of MFine and LifeCell’s diagnostics arm. Rural fintech startup Jai Kisan received $50 million as the first close of its Series B round while two neobanking startups Fi and Niyo were next on the list.

The full database is available here.

The top 10 list also includes SaaS company Detect Technologies, fintech startup Innoviti, agritech firm Vegrow, biotech firm String Bio and Healthtech startup Wysa. In the previous months, early stage startups managed to raise funding on par with growth stage startups currently.

Top 10 Early stage deals

In the top early stage deals, there was a surprise entry of 5ire, a fifth generation level one blockchain network, which announced a $100 million Series A round at a $1.5 billion valuation. It’s the second startup after OfBusiness’ lending arm Oxyzo to turn unicorn at Series A stage. 

B2B solutions provider PriceLabs, fintech startup Sitara, healthtech company Eka Care, and drone startup EndureAir Systems were some of the notable deals in early stage in July.

There were 24 startups, mainly in the early stage, which did not disclose their transaction details.

City and segment wise deals

Bengaluru is the default leader in terms of the number of deals as the city-based startups scooped up $430 million or almost 50% of total funding across 49 deals. Delhi NCR and Mumbai-based startups saw 23 deals each followed by Pune and Chennai with 8 and 5 deals respectively.

Fintech was the top segment and saw 16 startups raising funds in the segment amounting to $269 million or 30% of the overall funding. SaaS, healthtech, e-commerce and agritech were next on the list. As expected, edtech was out of the top 5 list and slipped to the eighth position. Entrackr recently published a report to highlight how venture capital and private equity funds have started focusing more on fintech, healthtech, SaaS and agritech, with edtech struggling to woo investors in their new fund launch in 2022.

Social commerce startups, which were on a high during 2021 and early 2022, saw a complete miss in July. As per Fintrackr’s data, social commerce startups raked in $1.1 billion in 2021 and $285 million during the first half of 2022. Meesho alone scooped up $870 million across two deals followed by DealShare which raised $375 million in its last three rounds since December 2020. CityMall also secured $75 million in a funding round in March this year. The recent developments on mergers & acquisitions, pivots and shutdowns in the social commerce space can be seen in Entrackr’s report published on June 8.

Mergers and Acquisitions

There were 14 deals on the mergers and acquisitions list in July. MFine, which was struggling after a mass layoff, announced its merger with LifeCell International’s diagnostic business to create a new entity called LifeWell. The acquisition of mobile platform Indus OS by digital payments and financial services player PhonePe in a $60 million deal was also completed in July after being in the works for a long time.

The list also includes higher education platform upGrad which acquired online learning institution Harappa Education for $38 million and the acquisition of Arvind Internet Limited’s Omuni by Zomato-backed logistics technology platform Shiprocket.

Funds and Accelerator programs 

Amid the slowdown in funding, around 10 VC firms and 2 accelerator programs also announced their arrival in July. B Capital announced a $250 million India focused fund to back startups in fintech, SaaS, healthtech, logistics, web3, and crypto segments. Rocketship.vc joined the list with a $125 million fund to back startups focusing on bharat.

While other investors in the list are raising relatively low funding, PE fund WestBridge Capital reportedly raised $1.5 billion for its latest India focussed fund whereas Axilor Ventures, a fund launched by Infosys co-founders Kris Gopalakrishnan and SD Shibulal, is also planning to raise a $100 million worth seed fund. According to a Reuters report, India’s private equity firm Lighthouse is in talks to raise $400 million for its latest fund.

FIITJEE, an educational institution, launched the FIITJEE Accelerator Program to help founders build and scale enduring companies. The programme will offer mentoring programs and funding opportunities for startups in the edtech, healthtech and social impact (with deep tech applications only) space. Another accelerator called FHealth Accelerator has launched the first batch of its accelerator program to support and accelerate the growth of healthcare focussed startups in their early revenue stages.