Indian startup ecosystem closed FY22 with funding of $38.3B across 1,633 deals

We just saw the end of another financial year (2021-22, aka FY 2022), and in FY 2022 too, the Indian startup ecosystem has been growing strength to strength. Even the COVID-19 pandemic, which had impacted substantial part of FY 2022, could only pose its challenges but could not dent the funding momentum which saw 1,633 deals clinched during the fiscal gone by.

The fiscal gone by will also be historic, as it recorded the elevation of 54 startups into the $1 billion-plus valuation club, and thus becoming Unicorns of India.

Interestingly, 14 out of these 54 unicorns have upscaled in the latest quarter; January – March 2022, which gives strength to the belief that 2022 could be another year of unicorns, just like 2021.

Higher number of deals 

While unicorns are seen as the crown jewels of India’s startup ecosystem, at YourStory the focus has always been at showcasing the valour and persistence of founders who toil their way nurturing their startups with sweat and blood.

And that is what deserves equal, and more, celebration with all-round applauses. Without much ado, lets deep-dive in the FY 2022 from the Indian startups’ standpoint and check out the slicing and dicing of the funding data painstakingly collated by YourStory Research team.

In FY 2022, the Indian startup ecosystem recorded 1,633 funding deals which was 16 percent higher than 1,406 deals seen during FY 2021.

While there is an absolute rise of 227 deals in the latest fiscal compared to previous, it is noteworthy that 287 deals – nearly 17.6 percent – of the 1,633 deals have undisclosed value.

So, considering that FY 2022 saw 1,346 disclosed funding deals adding up to $38.3 billion, the average deal size for the fiscal works out to nearly $28.5 million.

Decoding the funding stages

A closer look at FY 2022 funding deals’ data from the lens of funding stages reveals that 57 debt financing deals valued at over $1.76 billion, accounted for nearly 3.5 percent of the deals’ count and 4.6 percent of the total funding. However, in comparison to FY 2021, the number was significantly lower as the previous fiscal saw 59 debt financing deals adding up to $3.42 billion.

Early-stage funding, like always, accounted for 74.1 percent (1,210 deals) of the total deals’ count while their value of nearly $4.41 billion accounted for 11.5 percent of the total deals’ value of FY 2022. The good news is that FY 2022 saw nearly 40 percent growth in the value of funding, compared to $3.16 billion across 1,399 deals – which suggests a 15.6 percent dip through 189 lesser early-stage deals in the latest fiscal.

The 227 growth-stage deals in FY 2022 accounted for 13.9 percent of the deals’ count while their total value of $8.92 billion stood close to 23.3 percent of the total funding value. This was a major decline, both in value and volume terms, in comparison to $11.64 billion mopped across 182 growth-stage deals during FY 2021.

Similarly, 134 late-stage deals accounting for 8.21 percent of the total number of deals, adding to little over $23 billion – 60.08 percent of the total value of $38.3 billion – was also lower than FY 2021’s 122 late-stage deals which saw the raise of $25.5 billion in total.

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Decoding the funding series

Given that early-stage had the lion's share of the total number of deals (74.1 percent), it is natural to expect pre-Series A and Series A to have the lion's share of deal count too.

Indeed, 814 pre-Series A deals, valuing over $1.1 billion (2.89 percent), accounted for 49.85 percent of the total number of 1,633 deals. Similarly, 175 Series A deals, worth close to $2.33 billion (6.08 percent), accounted for 10.72 percent of the total number of deals in FY 2022.

Beyond that, Series B, C, D, E, and F with 80 (4.9 percent), 56 (3.43 percent), 33 (2.02 percent), 23 (1.41 percent), and 15 (0.92 percent) deals, respectively contributed $2.54 billion (6.63 percent), 3.27 billion (8.53 percent), 2.61 billion (6.82 percent), $3.96 billion (10.33 percent), and 3.62 billion (9.45 percent) of the total value of funding.

Also, $1.79 billion was raised across Series G,H, and I with a respective breakup of $943 million (4 deals), $275 million (1 deal), and $575 million (2 deals). These three late series together accounted for 4.68 percent and 0.43 percent of the total deal value and volume each, across FY 2022.

The fiscal saw five hybrid deals, including equity and debt, worth $204.1 million, while the 57 debt financing deals (4.6 percent) valued at $1.76 billion accounted for 3.49 percent of the total value.

Deals where the series type was unspecified were 368 in numbers – 22.54 percent of the volume – and they were cumulatively valued over $15.1 billion, or 39.46 percent of the total fund raising of $38.3 billion.

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Top sectors’ scan for FY 2022 

The top 10 sectors – which accounted for funding value of nearly $27.5 billion across 931 deals – contributed to 71.65 percent and 57.01 percent of FY 2022’s total funding value and volume respectively.

Interestingly, the top 5 sectors saw cumulative fund raise of nearly $19 billion across 700 deals – contributing to 49.56 percent of the total value and 42.87 percent of the total number of deals.

The top five sector includes fintech and financial services with 278 deals (17.02 percent) worth $8.53 billion (22.27 percent, edtech and education services with 155 deals (9.49 percent) worth $3.94 billion (10.27 percent), direct-to-consumer (D2C) brands with 191 deals (11.7 percent) worth $2.31 billion (6.04 percent), foodtech with 19 deals (1.16 percent) worth $2.1 billion (5.5 percent, and logistics and supply chain with 57 deals (1.16 percent) worth nearly $2.1 billion (5.47 percent).

In an earlier conversation with YourStory, GV Ravishankar Managing Director, Sequoia Capital India, said, “The year was exciting in many ways. Despite being affected by COVID-19, tech companies had significant benefits. There has been a focus on COVID-19-led technological and digital adoption like ecommerce, edtech, and there have been several beneficiaries. This just meant that more companies saw significant traction, and this led to investors putting in more capital in the market.”

D2C brands’ sector, which featured at no. 3 in terms of highest fund raise with $2.31 billion, saw a stupendous increase in FY 2022 when compared to 105 deals worth $1.33 billion in FY 2021. Fintech and edtech sectors have respectively maintained their lead in FY 2022, in comparison to fintech’s 240 deals (worth $7.3 billion) and edtech’s 150 deals (worth $3.35 billion) in FY 2021.

The sectors which are worth keeping an eye on include blockchain, which saw 9 deals worth $463.7 million, hyperlocal which saw 5 deals worth $412.3 million, artificial intelligence (AI) which saw 4 deals worth $405 million and deeptech which saw 49 deals worth $236.8 million.