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Indian startups may see a shift in pace and quality of VC deals in 2022: Report

Consumer technology, fintech, and SaaS accounted for more than 75% of the VC investments in terms of overall deal value in 2021.

March 31, 2022 / 11:07 AM IST
Representative image

Representative image

The Indian startup ecosystem is likely to witness a shift in the pace and quality of venture capital deals in 2022 due to global headwinds, although total investments are expected to remain in a range similar to 2021, according to a report by consultancy Bain and Co released in collaboration with Indian Venture and Alternate Capital Association (IVCA).

It said that global headwinds in early 2022 are likely to affect the funding outlook for the rest of the year but the funding momentum is expected to continue given the availability to capital and depth in the ecosystem.

"We expect that global headwinds and macro-conflicts impacting public tech listings are likely to have a trickle-down impact - investors are likely to double down on larger rounds in quality assets and focus heavily on leaner unit economics - with a slower pace of dealmaking and rationalised valuations," Arpan Sheth, partner at Bain & Company, said in a statement shared with Moneycontrol.

After an exuberant 2021, this year started off more cautiously with several highflying new age tech stocks coming under fire on domestic bourses amid a broader public tech stock selloff in the global markets. Companies like Zomato, Nykaa, CarTrade, Policybazaar and others have witnessed a 40-60 percent dip in their stock prices while Paytm is currently trading at a quarter of its IPO issue price.