Funding in Indian startups fell below $3 Bn in July-Sep quarter: Entrackr report

Indian startups continued to experience funding at the same clip for the past three months. While some managed to close big rounds, the overall investment in homegrown startups stayed below $1 billion in September, more or less similar to July and August. 

Data compiled by Fintrackr shows that 366 Indian startups raised nearly $2.9 billion in funding in the third quarter of 2022, essentially the July-September period. This includes 58 growth stage deals worth $1.9 billion and 250 early-stage startups raising $956 million in total during the period. Around 58 startups, mostly early stage, remained undisclosed.

The full database can be checked here.

The decline in startup funding began in July when the total amount inflow fell below $1 billion ($870 million) for the first time in 2022. The trend continued in August and September with $1.06 billion and $963 million in funding, respectively.

The month-on-month data for funding in Indian startups can be seen below:

In Entrackr’s quarterly funding report, here are details of the top 25 deals in both the growth stage and early-stage investments for the July to September period.

Top 25 growth stage deals

Edtech startup upGrad’s $210 million round came as a surprise for the struggling edtech segment. It remained the only startup to mop up more than $200 million round during the third quarter of this year. EarlySalary, CleverTap and OneCard became three startups each of which raised $100 million or more in the growth stage list. OneCard also turned unicorn after the Series D round led by Temasek.

Healthcare company Molbio Diagnostics (which also turned unicorn), electric vehicle startup Yulu, diagnostics testing platform LifeWell, fintech startup Zopper, personal device management company Servify, were some other notable deals among growth stage companies. Apart from OneCard and Molbio, 1mg, Shiprocket and 5ire also attained unicorn status during Q3 taking the total list of unicorns to 23 in 2022.

Top 25 early stage deals

Blockchain platform 5ire entered the unicorn club with $100 million fundraise in its Series A round and remained the top funded company in the early stage group. Earlier this year, OfBusiness’ lending arm Oxyzo and edtech company PhysicsWallah entered the club with $200 million and $100 million Series A round respectively.

SaaS startup PriceLabs, fintech startup Dezerv, healthtech startup Mojocare and another fintech company Sitara were the top five fundraisers in Q3, 2022. 

Comparison Q3 Vs Q2

In a quarter-on-quarter comparison, we can see that the numbers of deals, as well as value, declined from 431 to 366 and from a whopping $7.86 billion to $2.89 billion respectively. Reasons for this downward trend: lack of larger rounds and a sharp decline in growth stage deals.

City and Segment wise deals

As usual, Bengaluru was on top in terms of the number of startup deals and the amount raised during the July-September period. Startups based out of the city scooped up nearly $1.06 billion across 143 deals or nearly 37% of the total amount raised in the period. During the Q3, Delhi-NCR-based startups raised over $460 million across 90 deals making them second in line, followed by Mumbai, Pune, Chennai and Hyderabad with 71, 18, 10, and 7 deals respectively.

The full report in pdf can be found here.

The complete breakdown of deals across cities and segments during the third quarter can be seen below:

Fintech was the top segment in terms of the number of funding deals in Q3 2022 with 51 deals followed by SaaS, healthtech, edtech, and foodtech. Edtechs were struggling during the first half of 2022 but a clutch of deals including upGrad, Sunstone, and Bhanzu propelled it to the top five list.

Mergers and acquisitions

Indian startups also saw a significant decline in mergers and acquisitions in Q3 when compared to the previous quarter. As per Fintrackr’s data, there were 38 such deals in Q3 while Q2 saw 58 deals. The acquisition of Ezetap by Razorpay in a $200 million deal was on top of the list. PhonePe also concluded the acquisition of Indus OS which has been going on for more than a year.

Edtech also saw a bunch of consolidations during Q3 which include acquisitions of Harappa Education and Exampur by upGrad, Schola by Brightchamps, and FreeCo by PhysicsWallah.


Early Vs Growth stage deals: While overall funding is on the decline, the number of early stage deals have increased in 2022. For context, around 1,041 early stage startups have raised funds in three quarters of 2022 as compared to 1,245 in 2021. At this rate, it may surpass 2021 numbers.

Less number of fund launches: More than 90 VCs, PE, and debt funds have announced their new fund launch as of July. However, this also saw a decline in the past couple of months. In August, Fundamentum, Stride Ventures, Merak Ventures and Cactus Ventures announced their new fund launch whereas September saw only a couple of fund launches including Elev8 Venture Partners and StartupXseed. The past trend also indicates that these funds are in no hurry to deploy capital considering the ongoing slowdown. 

Low cheque size: The low-ticket cheques for growth and late stage startups has become a new normal. Neobank startup Open, fintech startup Jar, digital payments company Mobikwik, and logistics company Rivigo are classic examples of this. On average, the cheque size of growth stage startups reduced from $60 million in Q2 to $32 million in Q3. In Q1, the average cheque size was around $85 million.

Sharp decline in ESOP buyback: Fintrackr’s data shows that more than 20 startups announced ESOP buyback, liquidity or sale worth around $200 million in the first six months of 2022 while the second half (H2 2022) saw only one buyback i.e. Orange Health. In 2021, Indian startups bought back $440 million worth ESOP held by their employees.

Shutdowns and layoffs: More than 11,000 employees lost jobs whereas nearly half a dozen companies shut down their operations in the past six months. The layoffs and shutdown reduced drastically during Q3 which was a good sign of revival.


Cynical market observers will perhaps point out that this slide in deals and deal sizes was foretold, when people began to take a ‘unicorn a week’ for granted in the startup ecosystem. But it would have been hard to see this coming for many, but for the jolt to the global economy after the Russia-Ukraine war.

The bright spot in this ‘winter’ is that the evolving domestic support system in terms of investors that had been emerging for some time now, has finally got down to work, picking up the slack from global flows, even if at lower valuations. That seems apparent from the numbers too.  This domestic support system only seems set to grow further, notwithstanding any further shocks to the system. The slew of successful IPOs from Indian startups has also been of great help, offering liquidity to investors and fantastic returns for many. Even as many of those valuations have been punished post IPO, the afterglow of successful exits remains with many early investors.  Many perceived challenges with investing in India have also been offset by greater worries about investing in China especially, further softening the blow from any investor apathy here. 

Founders will do well to temper expectations accordingly, and plan for a much more extended, if milder funding winter this time. Don’t expect the rock and roll days of the 2020-21  funds rush anytime soon.

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