Funding winter: PE/VC investment in Indian start-ups picks up in Nov 2022, but shows 28% YoY decline

Private equity and venture capital firms invested $3.5 billion (across 84 transactions) in Indian companies in Nov 2022, according to research platform, Venture Intelligence. Though this number indicates a 35 per cent increase from the previous month (October 2022 which saw $2.6 billion being invested across 76 transactions), it is still 28 per cent less compared to the year-ago month. In November 2021, $4.9 billion was invested into companies across 105 deals.    With this, Indian companies have raised $44 billion in 2022 cumulatively, down by 32 per cent from last year when they raised $64.8 billion during the January to November time period(2021). The number of deals has also declined from 1,356 to 1,191 in the last one year.   Venture Intelligence also highlighted that the exit deals have also gone up by 2.7x this year. VC and PE firms harvested about $2.5 billion from 25 deals in November as compared to the previous month which saw the closure of 15 deals which generated about $0.9 billion. The exit value as well was still 36 per cent less compared to November 2021.    These numbers indicate that while funding is picking up gradually this year, it is still on a decline compared to last year. Thus, the chatter around “funding winter.”    Anas Rahman Junaid, Founder and MD of Hurun India says that “2021 was a crazy year for asset classes.” Calling the year an “aberration” he says it was miraculous to see so many deals closing and unicorns emerging in the year 2021.    However, 2022 and the years to come from here on would be different, he notes. “The scenario of hyper growth among Indian start-ups will temper down as a lot of focus will be on fundamentals like revenue, controlling cost and profits.”   Junaid also added that several start-ups have raised money from marquee investors this year. This clearly indicates that “grounded and gritty investors will focus on net margins,” he says.   Some of the top deals which took place this year include that of co-working space firm, TableSpace, which raised $300 million from Hillhouse Capital, renewable energy company, ReNew Power, which raised $400 million from Canada Pension Plan Investment Board, among others.