Indian startups have raised over $10 billion for three consecutive quarters now, with the world’s third-largest startup ecosystem garnering $10.8 billion in the first quarter of calendar year 2022, a PwC India report showed.
The $10.8 billion funding, between January and March, panned across 334 deals, the report titled ‘Startup Deals Tracker - Q1 CY22,’ showed, with software-as-a-service (SaaS) companies getting the highest share of funding during the period. SaaS companies garnered $3.5 billion, the report added.
Moreover, as many as 14 unicorns or startups with over $1 billion valuation were minted by investors during the Jan-Mar quarter, taking the total number of privately held startup unicorns in the country to 82 as of 31 March 2022, the report said.
Out of these newly minted 14 unicorns, five were SaaS companies, according to the report.
Approximately 89% of the funding activity in the first quarter of 2022 was driven by growth-stage and late-stage deals in value terms, while it accounted for 44% of the total deal activity in terms of volume, the report showed.
Fintech, SaaS, edtech, logitech and autotech, and e-commerce B2C (business-to-consumer) were the top five sectors across the last few quarters, contributing nearly 60% of the total funding activity, according to the report.
The report further showed that growth-stage funding totaled to nearly $6.5–7 billion over the last three quarters, with an average deal ticket size of $55–70 million, while early-stage funding rounds were worth $761 million with an average ticket size of $4 million per round, accounting for 55% of the total deal activity.
“Despite uncertainties in the global economic environment, Indian startups have continued to attract capital, particularly in the growth capital stage,” said Amit Nawka, Partner - Deals & India Startups Leader, PwC India.
“As more start-ups mature, conversations around corporate governance are now becoming mainstream. It will become increasingly important for Indian start-ups to design a corporate governance road-map synced with organizational growth aspirations,” Nawka added.
However, there has been a decline in the average ticket size of the late-stage deals recorded over the last two quarters, the report showed as in the third quarter of 2021, seven big ticket deals in the late-stage, having a ticket size of over $200 million each--PineLabs, PharmEasy, Swiggy, Dailyhunt, Unacademy, Gupshup and Delhivery, were recorded against three in the fourth quarter of 2021 and five in the first quarter of 2022, when Byju’s Pine Labs raised pre-IPO (initial public offer) rounds of $420 million cumulatively.
Bengaluru and NCR (National Capital Region) continued to be the key startup cities in India, together contributing around 65% of the total funding activity in Jan-Mar, followed by Mumbai, Chennai and Pune, the report showed.
More than $100 million was raised by 14 companies each in the first quarter of 2022, majorly across the SaaS, foodtech and logi and autotech space, according to the report, while in NCR, four companies-- Moglix, Oxyzo, Pine Labs and Zupee – raised more than USD 100 million each during the period.
Further according to the report, fundingactivity in Chennai--driven by big-ticket funds raised by Uniphore, Chargebee and CredAvenue--and in Pune--more than $200 million raised by three companies--ElasticRun, Xpressbees and FirstCry--increased significantly.
The report further showed that 38% of the merger and acquisitions deals in the first quarter of 2022 were in the e-commerce and direct-to-consumer (D2C) space, while 22% are in the SaaS space.
Amongst acquisitions by corporates, Reliance Retail’s acquisitions of the majority stake in Addverb Technologies and Clovia for $132 million and $125 million respectively were the largest acquisitions by deal size in Jan-Mar, the report showed.
Domestic deals accounted for 90% with the remaining being outbound and inbound deals, the report showed.
Globally, the January-March quarter saw emergence of 110 unicorns, with the total unicorn count crossing 1,000, according to the report, suggesting that investors minted at least one unicorn per day. However, the report said that in percentage terms, there was a 20% decrease from the previous quarter. Of the 110 unicorns, more than 56% of the new unicorns were from the US, with India ranking second at 12%.
Globally too, SaaS has dominated this quarter with approximately 43% of the new unicorns emerging from the sector, the report showed. The trend in India was similar with a fourfold increase in funding activity in the SaaS sector in first quarter of 2022 against the fourth quarter of 2021.
“The Covid-19 pandemic has boosted the SaaS ecosystem globally, given the rising importance of remote working, productivity and overall digital transformation,” the report said.
“The past year has seen the advent of 15 SaaS businesses in the unicorn category amongst Indian start-ups, including Darwinbox, Fractal, Uniphore, Hasura and Amagi Media Labs. With Freshworks’ blockbuster listing on Nasdaq in 2021, mature SaaS players are increasingly considering public listing,” according to the report.
Moreover, a total of 52 private startups are globally recognized as ‘decacorns’ worth $10 billion, with ten new entrants in the first quarter of 2022. From India, Swiggy joined the list of decacorns in Jan-Mar.