The year 2022 was a learning curve for the startup sector. The startup ecosystem kicked off the journey at a good pace by elevating 14 startups to unicorn status within the first three months.
However, annual startup funding reports say that the funding declined by 40 per cent in 2022 compared to the previous year.
The funding winter has adversely affected the emergence of unicorns. According to data intelligence platform Venture Intelligence, if 2021 gave birth to 44 unicorns, in 2022, it was just 21. While the seed-stage startups caught the attention of investors, growth, and late-stage startups fell behind. However, the year saw India emerging as a powerful digital economy.
Deals that are above 100 million dollars, usually called ‘mega deals’, got declined by 45 per cent this year. Hesitation of investor giants like SoftBank and Tiger Global has heavily contributed to this decline. Compared to the 40 deals in 2021, they took part in only 18 deals in 2022. One of the significant mega deals of the year was that of media and entertainment firm VerSe ($805 Mn). Edtech unicorn BYJU’S received 800 million dollars while Food tech giant Swiggy got 700 million dollars. Seed-stage startups received two billion dollars, the biggest so far.
The e-commerce sector recorded 4 billion dollars from 310 deals, thanks to the boom of micro, instant delivery models, and digitization. Investors were concerned about the emergence of new Covid variants. However, this fear fuelled the growth of e-commerce, fintech, and enterprise tech. In terms of funding, fintech recorded 4.5 billion dollars from 250 deals. Enterprise tech startups received 4 billion dollars from 303 deals. In the previous year, it was 3.2 billion dollars from 229 deals.
The year also witnessed budding startups from across the nation gaining funding. The sector saw 41 per cent growth. As all state governments began supporting the startup ecosystem, investors shifted their attention to ventures that solve basic issues using local measures. They found early-stage, bridge-stage startups a safe point. Emerging hubs saw 10 mega deals.
They are Uniphore ($400 Mn), Chargebee ($250 Mn), CredAvenue ($137 Mn), Waycool ($117 Mn), Elastic.run ($330 Mn), Expressbess ($300 Mn), Firstcry ($100 MN), OneCard ($100 Mn), and Smartron( $200 Mn).
Seven women-led startups 5ire, Amagi, Hasura, Lead, Livspace, Open Bank, and Oxyzo entered the coveted Unicorn club in 2022. It is a 33 per cent jump from 14 per cent in 2021.
Factors such as the Russia-Ukraine war, inflation, and increase in interest rates have forced investors to tread carefully in 2022. The year showed businesses with a feasible product, and clear marketing strategies can survive the storm. Although the pandemic is not over and inflation threats are still looming, entrepreneurs are hopeful that the startup ecosystem will flourish in 2023.
