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Indian startup sector sees 80% drop in Q3 funding, slowdown continues

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Funding for Indian startups fell by as much as 80 percent (year-over-year) this year in the third quarter (July-September), with late-stage funding seeing the biggest drop, a report found on Tuesday.



Indian startups raised $3 billion in the third quarter, which was also 57 percent lower than in the previous quarter (Q2) this year.

Average ticket size also witnessed a decline across all funding stages, with the late stage showing the largest drop of more than 70 percent, from $142 million in the third quarter of 2021 to $42 million in the third quarter of 2022.

This indicated that investors are unwilling to investments until economic conditions stabilize, reports market information platform Tracxn.

India is currently facing a funding slowdown that is expected to continue for the next 12-18 months and the effects of the funding slowdown are expected to intensify in the future.” Neha Singhco-founder of Tracxn.

Executives around the world anticipate a recession in the near future and prepare to cut costs.

“To add to their misery, the recent energy crisis in the UK and Europe as well as the sliding GBP and EUR have increased the likelihood of a global recession,” Singh added.

India’s genomics sector saw maximum investor interest in the third quarter and received more than $231 million in funding, which is higher than the total funding received in the year 2021.

The five companies that raised more than $100 million in the quarter were EarlySalary, 5ire, InsuranceDekho, OneCard and BookMyShow, with the most active investors being Better Capital, Venture Catalysts and golf.

Some of the other key highlights included 109 startups that closed their first round of funding, three startups that became unicorns, 39 startups that were acquired and two that went public.

Molbio Diagnostics, 5ire and OneCard became unicorns and Zopper, LifeCell, Jar, DotPe, Vegrow Bigspoon, InsuranceDekho, CUSMAT, Airtribe and Serentica Global joined the Soonicorn club.

India received $752 million in funding in September, a 15 percent drop from August and an 83 percent drop from the same period last year.

“We see major PE and VC funds moving cautiously, led by significant changes in the investment environment in recent quarters. We expect this to continue until we see signs of stabilization globally,” he said. Abhishek Goyalco-founder of Tracxn.

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