Indian startup funding hits two-year low in September quarter: PwC

Indian startup funding in the third or September quarter of the current year hit a two-year low of $2.7 billion across 205 deals as the global funding winter set in.

“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 accounted for around 21% of the total funding value in the third quarter compared to approximately 12% in the previous period," a report by PwC India said.

Growth and late-stage funding deals accounted for 79% of the total funding value in the third quarter. Average ticket size in growth-stage deals continued to decline at $32 million during the period.

By volumes, early-stage deals accounted for 70% of total funding in the third quarter compared to 60% in the previous period. The average deal ticket size ranged from $4–5 million.

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, said Amit Nawka, Partner of Deals & India Startups Leader at PwC India.

With a major hit in valuations, mergers and acquisitions have sped up in India. As many as 38 M&A deals involving startups were executed in the third quarter.

“Around 30 domestic, five inbound, and three outbound deals took place in the third quarter. SaaS and edtech witnessed the highest number of M&A transactions – nine in SaaS and seven in edtech,” the report said.

Edtech company upGrad has been the top acquirer in the quarter under review with four acquisitions – Wolves India, Harappa Education, Exampur, and Centum Learning.