Indian startup funding hits two-year low in Q3 at $2.7 billion: PwC India

Only two startups in India attained the unicorn status in the July-September period of 2022

Amid global economic slowdown, startup funding in India hit a two-year low at $2.7 billion in the third quarter of 2022, as per a PwC India report.

Only two startups in India attained the unicorn status in the July-September period of 2022, mirroring a global trend in decline in the number of new unicorns this last quarter, said the report titled 'Startup Deals Tracker - Q3 CY22'.

Globally, the quarter under review produced 20 unicorns and 45% of them are from the SaaS segment. No new decacorns were added in this quarter.

"The global slowdown in funding continues with startup funding in India in Q3 CY22 hitting a two-year low at $2.7 billion across 205 deals," the report said.

While a decline in funding is noted across all stages of investment -- early, growth and late -- it has been the least in early-stage deals which contributed around 21% of the total funding by value in third quarter of calendar 2022. It was approximately 12% in the preceding quarter, showing that venture capital (VC) firms continue to back the Indian startup ecosystem.

"It is tough to predict how long the slowdown in funding will last but clearly, both founders and investors are being more selective and cautious in deal-making," said Amit Nawka, Partner - Deals & India Startups Leader, PwC India.

In general, early-stage startups will be able to raise capital more easily as they are typically more insulated than late-stage deals from fluctuations in the public markets, he said.