The Next Big Leap

The Next Big Leap | 15 [ OVERVIEW OF START-UP ECOSYSTEM IN INDIA ] The top 5 sectors in terms of funding were Software as a Service (SaaS), FinTech, Logi & AutoTech, EdTech, and Direct to Consumer (D2C), which cumulatively accounted for almost 71% of investment in start-ups in value terms. Investment activity in top 5 sectors Source: India Start-up Deals Tracker CY22, PWC SaaS start-ups reported a 20% increase in funding values to US$ 6 bn in 2022, while the number of deals increased by a mere 1 to 330 in 2022. This led to a rise in average deal ticket size to US$ 18 mn in 2022 from US$ 15 mn in 2021. While around 65%of deals in this segment were driven by early-stage funding rounds, 14 companies raised an excess of US$ 100 mn in 2022. The funding growth in SaaS start-ups can largely be attributed to the growing asset depth and EBITDA-positive business models. FinTech start-ups reported a 40% decline in funding values to US$ 4.7 bn in 2022, which is in line with the global contraction in FinTech funding. As a result, despite a 6% decline in the number of deals, average deal ticket size declined to US$ 25 mn in 2022 from US$ 40 mn in 2021. Logi andAutoTech start-ups witnessed a 2% decline in funding value to US$ 2.4 bn in 2022, while the number of deals increased by 16% to 63. With this, average deal ticket size declined to US$ 39 mn in 2022 from US$ 46 mn in 2021. In this segment, while ~31 companies were involved in early- stage funding, seven companies raised more than US$ 100 mn each. EdTech start-ups reported declines in both funding value and number of deals by 54% and 41%, respectively, in 2022. In 2022, EdTech start-ups raised US$ 1.8 bn through 52 deals. Similarly, in D2C, funding value and the number of deals declined by 26% and 14%, respectively, and raised US$ 1.8 bn in 114 deals. In D2C space, while 4 companies raised more than US$ 100 mn each in 2022, the average deal ticket size stood at US$ 15.6 mn. Higher cash-burn business models in consumer tech segments like D2C as well as online food delivery, and B2C commerce were a major concern for investors in 2022 which refrained them from getting into large deals in these segments. Dun & Bradstreet