Indian startups saw a 30% surge in funding in October as a bunch of them managed to pull in big rounds during the last month.
As per our data tracking platform Fintrackr, funding for homegrown startups surged to $1.26 billion across 94 deals in October as compared to $963 million ($0.96 billion) in the previous month of September. The deals consisted of 18 growth-stage deals worth $962 million and 66 early-stage startups raising $300 million in total during the period. Around 10 startups, mostly early stage, remained undisclosed.
The full database can be seen here.
While the first half of 2022 saw a funding surge with Indian startups mopping up nearly $20 billion during the six-month period, the month-on-month funding started to decline in July to less than $1 billion. Thereafter, the total funding in Indian startups hovered around $1 billion each month.
The fluctuation in funding during 2022 can be seen in this month-on-month graph:
Top 10 Growth stage deals
Byju’s $286.5 million (including a loan or debt of $36.5 million), Icertis’ $150 million, and Udaan’s $120 million funding via debt and convertible notes headlined the funding rounds that helped cross the $1 billion funding mark last month.
Besides these three, Euler Motor, Ather Energy, and DeHaat (ongoing round) were some of the notable growth stage deals in October. Consumer electronics startup boAt, which has pushed its IPO plan for 12-18 months, also raised around $60 million from new and existing investors.
Top 10 Early stage deals
Early stage startups scooped up $300 million in October. GlobalFair, supplier of building materials, spearheaded the list with a $20 million round led by Lightspeed followed by blockchain-based startup Shardeum, neobank Juno, and crypto startup Pillow.
Cross-border e-commerce accelerator Assiduus, fintech startups Drivetrain AI and Snapmint, open-source DevOps platform Devtron, coliving startup Isthara, and D2C brand Good Health Company managed to raise $10 million plus round among early stage startups.
Segment and city-wise deals
Data compiled by Fintrackr shows that startup capital Bengaluru saw startups raising $874.5 million across 51 deals making it the top city in terms of the number of deals. Delhi NCR-based startups raised around $266 million across 20 deals and Mumbai, Hyderabad, Indore, Pune, and Chennai were next on the list.
Segment-wise, D2C brands topped the list, followed by fintech, edtech, EV, SaaS, healthtech, and HRtech. Agritech saw a decline as compared to the previous month.
Acquisitions
Aside from more than 90 funding deals, the Indian startup ecosystem also saw a dozen acquisitions in October. Edtech saw the most number of mergers and acquisitions in the last month as Veranda Learning announced the acquisition of J. K. Shah classes for about $42 million followed by the majority stake acquisition of Deeksha by Vedantu in a $40 million deal. Naukri owner Info Edge acquired a majority stake in edtech company Coding Ninjas whereas robot maker Miko acquired a majority stake in chessboard maker Square Off.
The acquisition of online fashion marketplace LimeRoad by fashion retailer V-Mart Retail in a $3.8 million deal was one of the latest distress sales in the Indian startup ecosystem.
Startup-focused funds
According to an Entrackr report, over 90 VCs, PE, and debt funds had announced their new fund launch as of July this year. Since then, around 17 venture capital and debt firms have announced fund launches. The list counts Fundamentum, Stride Ventures, Merak Ventures, Cactus Ventures, Elev8 Venture Partners, StartupXseed, Blacksoil, Kettleborough VC, Fireside, Avatar Ventures, Alteria Capital, and IAN. In October, there were 11 startup funds announced by venture funds.
Trends
Rise in edtech acquisitions: While acquisitions in edtech was led by Byju’s and Unacademy or upGrad in the past, we have seen new players such as PhysicsWallah, Verdana Learning, and Vedantu going for acquisitions in October. The acquisition of a majority stake in Coding Ninjas by Info Edge is also an addition after the funding winter and layoff season for edtechs.
Debt funding in growth stage startups: Over the past few months, several growth and late-stage startups have raised funds via debt or via convertible notes. In October, business-to-business e-commerce major Udaan, edtech company Byju’s, fintech startup Perfios, and solar tech startup Orb Energy picked up debt. Foodtech company Rebel Foods also raised Rs 175 crore in debt in two tranches in the past months.
Upturn in startup fund launch: More than 90 VCs, PE, and debt funds have announced their new fund launch as of July. This saw a decline in August and September with four and two fund launches respectively. However, there were 11 fund announcements in October.
No unicorn in October: Surprisingly, Indian startups failed to create a new unicorn in October. In September, healthtech startups Molbio and 1mg entered the club while Zomato-backed Shiprocket achieved the status in the previous month.
Conclusion
The ‘recovery’ in October is a welcome development, but a conclusive turn for the better will probably take a few more months to be established. With the global shifts in financial flows thanks to the rising rates in the US and elsewhere, there is no doubt that investor expectations will also change, along with the need for the larger firms to shift from growth stage, negative flows to a more disciplined financial model. That probably explains the debt that has been taken on by the larger firms in the sample. The key metric to watch out for will remain the funding for early-stage startups, where the impact of extended squeezing can affect the funding pipeline for a long time into the future too.
