The Next Big Leap

The Next Big Leap | 13 [ OVERVIEW OF START-UP ECOSYSTEM IN INDIA ] Number of Indian unicorns minted every year Source: Traxcn Unicorns are start-ups with a total valuation of US$ 1 billion (bn) or more. Until December 2022, India had a whopping 108 start-ups that had gained the status of ‘Unicorns,’ withmany of themborn during the last three to four years. INVESTMENT SCENARIO IN INDIAN START-UPS The financing avenues for Indian start-ups typically extend from friends and family at the very early stages to seed/angel investors and finally to VC/PE funding. Investment from individual investors like friends and family and angel investors is primarily received at angel/seed funding stage, where funds are sought for testing & developing prototypes of products/ services. Pre-series A funding usually works as a bridge between individual and institutional investors with small investments. This is followed by Series A & B funding at an early stage, involving institutional investors as well as existing individual investors. The funds are used for capex, working capital, and expansion. At growth stage, Series C&D funding is generally availed of by start-ups for capex and Investment in Indian Start-ups Data for CY2022 Source: India Start-up Deals Tracker CY22, PWC organic or acquisition growth. In this stage, institutional investors like large/ late-stage VCs, PEs, hedge funds, and banks buy out early-stage investors. The next growth stage/late-stage funding is Series E, F, and beyond, which is availed of by well-established start-ups operating at scale andmaybe poised for an IPO. In CY2022, the funding raised by Indian start-ups declined by almost 33% to US$ 23.6 bn, while the number of deals declined slightly to 1,021 from 1,106 in 2021. This led to decline in average deal ticket size to US$ 23 mn in 2022 from US$ 32 mn in 2021. In 2022, growth and late- stage funding witnessed a decline Dun & Bradstreet