Indian tech start-ups raise $7.2-billion funding in Q1 CY2022: Report

BL Mumbai Bureau | Updated on: Apr 22, 2022
The tech start-up ecosystem received a major boost with the formation of 15 unicorns during the quarter

The tech start-up ecosystem received a major boost with the formation of 15 unicorns during the quarter | Photo Credit: marrio31

As much as 58 per cent funding by deal size was in the ticket size of $100 million and above

Buoyed by large ticket sizes of deals, Indian tech start-ups raised a total funding of around $7.2 billion in the January-March quarter of calendar 2022 (Q1 CY2022), as per a tech start-up investment factbook analysis prepared by Nasscom, in association with PGA Labs, the business research and market intelligence unit of Praxis Global Alliance.

As per the report, India’s tech start-up ecosystem received a major boost with the formation of 15 unicorns during the quarter. The total deal volume stood at around 34 per cent compared to Q4 CY21.

However, the percentage of funding in large funding rounds reduced from 68 per cent to 58 per cent in Q1 CY22. As much as 58 per cent funding by deal size was in the ticket size of $100 million or above while 17 per cent was in the $50-100 million range. A total of 12 per cent deals was in the $25-50 range while 13 per cent was below $25 million.

In terms of deal volumes, 76 per cent of the total deals by volume were of the ticket size of less than $25 million during the period.

Major drivers

Approximately 81 per cent of the funding activity during the quarter was driven by early-stage and growth-stage deals. Start-ups at growth stage were most funded, accounting for 52 per cent of funding activity. However, they represented close to 26 per cent by deal count.

The remaining 72 per cent was driven by early-stage start-ups (deal size remained small).

B2B start-ups

B2B tech start-ups funding accounted for around 59 per cent of the total funding raised in the said quarter. Overall, B2B start-ups raised over $4.2 billion in Q1 CY22 (owing to large ticket sizes of Uniphore, ElasticRun etc.)

Top three B2B funded start-ups include Uniphore, ElasticRun and XpressBees while the top three B2C funded start-ups were Swiggy, Polygon and Network FP.

Top deals

The top 10 deals accounted for $3,342 million of the funding. Swiggy’s $700-million fundraise in a new funding round led by Invesco was the top deal for the quarter, followed by Polygon’s $450-million fundraise. 

Uniphore’s $400-million deal, logistics start-up ElasticRun’s $332-million fundraise followed by edtech start-up Network FP’s $300-million fundraise rounded out the list of top five deals for the quarter.

Enterprise tech emerged as the top-funded vertical for the quarter, followed by fintech. Seven out of 15 unicorns added in Q1 CY22 were from enterprise tech, fintech and SCM & logistics sectors. Mamaearth (beauty and personal care brand) was the first unicorn of 2022 with $52-million funding led by Sequoia Capital.

Large ticket deals helped Enterprise tech and fintech account for close to 41 per cent of total funding. About 54 per cent of the deals were in three specific verticals – enterprise tech, fintech and edtech; 22 per cent of total deals was focused on enterprise tech.

The sector received a total funding of around $1.7 billion during the period with Sequoia and Accel being prominent investors. “B2B SaaS is driving global enterprise tech growth and Investment in this space has witnessed a tremendous increase,” the report said.

“Enterprise tech sector is packed with companies capitalising on increasing demand for tools in the world of big data, cloud, IoT, and cybersecurity,” it further added. 

In terms of fintech sector, close to 72 per cent investments are in growth stage. Lending and collection apps and platforms in the sector raised close to 60 per cent of total fintech funding, accounting for $755 million worth of investments. The sector also added two unicorns during the quarter — Oxyzo and CredAvenue.

“Areas such as neo-banking, Buy Now Pay Later, and crypto and NFTs are taking the market by storm and getting significant traction,” the report said.

Retail tech continued to witness good momentum with 8 per cent of the total Q1 CY22 funding. Investors Tiger Global, Accel and Blume have been active in this space. E-commerce raised $588 million and Dealshare and Udaan raised over $200 million each.

The edtech sector has strong growth potential with a funding of $627 million recorded in the quarter, as per the report. Better Capital and Blume were the most active institutional investors. Overall, the space saw close to 30 deals in Q1 CY22.

Health tech industry also continued to see growth, receiving a funding of $123 million; 55 per cent of investments was towards early stage start-ups; followed by growth start-ups (45 per cent). Major investments were done by Inflection Point Ventures (IPV).

SCM & logistics industry received a funding of $730 million in the quarter. Many investors participated in the sector, including Goldman Sachs, Tiger Global, Blackstone, among others. “Government initiatives such as GATI Shakti are resulting in increased investment in logistics sector and modernising existing facilities, along with other measures aimed at reducing logistics cost in the country,” the report said.

Overall, investors Sequoia Capital, Tiger Global, Better Capital, and Accel have done over 10 deals across sectors. Sequoia has majorly invested in almost all major sectors, including enterprise tech, fintech, retail tech, edtech, etc.

Published on April 22, 2022
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