![]() ![]() Given typically higher cash-burn business models in consumer tech, investors remained cautious about large deals in 2022. ![]() Moderation in consumer tech deal momentum was reflected across segments such as edtech, online food delivery, B2C commerce, and D2C brands. ![]() Several investment themes emerged in 2022: Consumer tech, however, saw a 55% drop, from more than $20 billion in 2021 to less than $10 billion in 2022. Software-as-a-service (SaaS) and fintech continued to see momentum relative to 2021, growing in salience from ~25% to ~35% of total funding in 2022. We are bullish on the potential of “Bharat”, or Tier 2+ India, and the next decade of start-ups serving its needs efficiently and profitably.” The urban-rural digital divide will continue to converge, creating opportunities for start-ups. “Through our investments in Citymall and Apnamart, we have seen disruption in large $100B categories in Tier 2+. Further, venture funding continued to see democratisation, with emerging hubs beyond Bengaluru, Mumbai, and the NCR (National Capital Region) receiving ~18% of the funding and accounting for 9 of 23 unicorns added in 2022. A significant drop in $100 million+ “megarounds” (from 92 to 48 over 2021–2022) was a key factor in deal size compression, with global investors exercising caution on large-ticket size deals. The decline was driven primarily by average deal size compression from $25 million to $16 million over 2021–2022. Further, series A deals maintained an average deal size of ~$11 million, cementing a step shift in early-stage dealmaking in India (average series A deals hit the coveted $10 million mark for the first time in 2021). We see limited impact, especially in early-stage rounds, and continue to invest across sectors.”ĭespite the drop in Indian VC funding to $25.7 billion (0.7x of 2021 funding), deal volume saw marginal 1.1x growth, reaching 1,611 deals led by an expansion in seed to series B deals. Low leverage, tech adoption, and favorable demographics create a long runway for growth. "While macroeconomic factors drove the slowdown in funding globally, India continues to be attractive for investors globally given strong fundamentals. For the second time in a row, the number of unicorns added in India (23) outpaced China (11), and India marked the addition of its 100th unicorn (Open Technologies) in May 2022. ![]() Within Asia-Pacific, the share of India-focused VC investments reached 20% for the first time, and India continued to account for ~5% of global VC funding in line with 2021. Deeper analysis of the underlying metrics, as indicated below, reflects a more nuanced picture:ĭecline in funding mostly took place over the second half of 2022 as global macro headwinds intensified over the year-in fact, investments grew 1.4x over the first half of 2021–2022 but saw a 70% decline in the second half of 2022 compared to the second half of 2021. However, India continued to demonstrate resilience to global headwinds as structural enablers drove a positive economic outlook (i.e., large consumption potential, inclusive growth led by scale digital adoption of the decentralised “India Stack,” effective fiscal and monetary policy discipline limiting inflationary growth, and tailwinds from economic activity shifting away from China). Funding momentum in India similarly softened in line with the global slowdown as total deal value saw a compression from $38.5 billion to $25.7 billion from 2021 to 2022. ![]()
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