VCs and PEs Invest $33.3 Billion In Indian Start-Ups Amid Funding Winter: Report

Updated on: 3 December 2022 10:21 pm

The Ritesh Agarwal-backed hospitality aggregator is planning an IPO in the first quarter of the FY 2023 with a target valuation of $7 billion to $8 billion

OYO To Lay Off 600 Employees Photo: The Ritesh Agarwal-backed hospitality aggregator is planning an IPO in the first quarter of the FY 2023 with a target valuation of $7 billion to $8 billion

A Software Technology Parks of India (STPI) report pointed out that venture capital (VC) and private equity funds (PE) have invested about $33.3 billion across 1,076 deals in the first half of the financial year (FY) 2023, Business Today reported.

This figure is expected to bring some fresh air to the start-up ecosystem in India, which is currently struggling to generate funds at the right valuation. Some experts are already calling the situation ‘funding winter.’

India is currently the home of the third largest ecosystem of start-ups after the US and China. The country houses 75,422 start-ups in 2022 compared to 471 in 2016, Business Today reported.

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But the drive has been going through a rough patch this year. In September 2022, Indian start-ups raised $752 million, an 83 per cent drop compared to the same period one year ago. Overall, investment rounds decreased by 59 per cent and on a month-on-month basis, they reduced by 15 per cent.

Coupled with the global economic downturn and low funding, companies are implementing cost-cutting measures to keep their businesses on the profitability track. Byju’s one of the largest edtech platforms in India, decided to rationalise its employee numbers in a phased manner that suggested a possible termination of 2,500 staff from its 50,000- strong employee bandwidth. Unacademy and Vedantu laid off several employees, e commerce giant Udaan also terminated 350 employees.

Since the beginning of 2022, Indian start-ups have terminated nearly 16,000 employees, a Business Today report pointed out.

Against this backdrop, it is now to be seen whether the VCs and the PEs can emerge as me he game changers in terms of investing money in start-ups in the coming months.