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Financing winter is here for tech startups and lasts 12-18 months: Tracxn

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  • Quarterly funding for the technology sector peaked at $14.8 billion in the third quarter of 2021 and has declined steadily since then, Tracxn says.
  • August 2022 witnessed $885 million in funding with 102 funding rounds and 9 acquisitions.
  • Bangalore leads in total funds raised, followed by Mumbai and Delhi.
  • Beenext, LetsVenture, Accel, Blume Ventures lead VC funding for August in India.

India is currently experiencing a financing winter for tech startups, expected to last 12-18 months, according to a report from Traxcn.

In the midst of the pandemic, quarterly funding for tech startups peaked at $14.8 billion in the July, September, 2021 quarter, and has steadily declined since then, the report said.

In the next two quarters that followed, the average money raised was about $10 billion, falling to $6.48 in the April-June quarter. It’s all going to get leaner in the current quarter as startups have raised just $2 billion so far with just a month to go.

In August, Indian tech startups raised $885 million and only a small fraction of companies surveyed by Tracxn received funding. Of the 100,000 companies surveyed, only 10,000 have received funding since last year.

Tech startups beating the financing winter

Despite the funding winter, edtech unicorn UpGrad was able to raise $210 million last month, in addition to $225 million in June this year. UpGrad plans to reach $500 million in gross revenue in FY23. The company also plans to hire 2,800 full-time and part-time teachers over the next three months.

Pune-based fintech startup EarlySalary also raised $110 million this month. It provides immediate loans to young salaried individuals.

“The most funded business models in the past year have been online test prep courses, local content sharing platforms, ultra-fast grocery delivery, digital wallets and hyper-local delivery platforms,” the report said.

India has 85 unicorns, 268 speedhorns and 938 minicorns, Tracxn revealed.

Top Indian Cities That Raised Money

Of the cities surveyed, Bangalore led the funding rounds with the maximum investment amount raised. Delhi-NCR, Mumbai and Gurgaon came in a close second.

Towns Financing
Bangalore 36 rounds, $234 million
Delhi NCR 24 rounds, $124 million
Mumbai 21 rounds, $364 million
gurgaon 11 rounds, $50.5 million

In the month of August, the top startups to raise funding were edtech firm Upgrad, neofintech firm EarlySalary, soonicorn device management firm Servify, and genetic testing firm MedGenome.

Financing ranking August 2022

To start Funding raised in August 2022
upGrad $210 Million – Series F
Early salary $110 Million – Series D
Servify $65 Million – Series D
MedGenome $50 Million – Series D

The top investors for the Indian tech space last month were AngelList with 313 investments; and LetsVenture with 303 investments. Beenext, LetsVenture, Accel, Blume Ventures are the leading venture capitalists within the Indian technology industry.

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