In Q1: 2022, startups raised $10B+ funding, but women founders garnered only $751.5M

The Indian startup ecosystem witnessed 482 deals in the first quarter of 2022, of which only 78 – 16.1 percent – were raised by women-founded and co-founded startups.

In Q1: 2022, startups raised $10B+ funding, but women founders garnered only $751.5M

Wednesday April 06, 2022,

6 min Read

The first three months of 2022 were record-setting for the Indian startup ecosystem. 

According to YourStory Research data, the January to March 2022 period saw 482 funding deals – 1.9 times, or 89 percent, higher than the 255 deals in Q1: 2021.

Also, at $10.02 billion, the fund raising in Q1: 2022 has been 2.7 times, or 169.5 percent, higher than $3.71 billion raised in the same period last year. 

Of the 482 deals that the Indian startup ecosystem witnessed in Q1: 2022, 78 were raised by women-founded and co-founded startups, making them 16.18 percent of the overall deals with a total value of $751.54 million (7.5 percent of the $10.02 billion raised). 

In Q1:2021, women-led startups had raised 44 deals, which was 17.25 percent of the 255 deals that the Indian startups raised, amounting to $218.19 million (5.87 percent of $3.71 billion raised).

The quarter saw 14 startups elevating to the billion-dollar-plus valuation club, joining the Unicorns of India. The promising statistic that Q1: 2022 holds is that the 14 unicorns anointed in the first quarter of 2022 are little over 31.8 percent of the 44 unicorns that evolved during all of 2021.

Of these, three unicorns - Amagi, Hasura, and Oxyzo - are women-led startups. This is a phenomenal feat that has been achieved by women-led Indian startups, and has helped put India on the global map. Everyone is sitting up and taking notice now. 

Women may have come a long way since they started out, but they have a longer way to go. 

Solo woman founders vs male counterparts

Women don’t have it easy at all when it comes to raising funding – especially if they are solo women founders. 

Of all the 482 deals that startups raised in 2022, solo women founders raised 16 - 3.32 percent - of the overall deals. The amount raised was $19.08 million, 0.19 percent of the $10.02 billion raised in all. 

One may argue that solo founders generally raise lesser capital, but male solo founders raised significantly more capital. They accounted for 404 deals, making it 83.82 percent of the overall 482 deals. They raised a whopping $9.27 billion, of the $10.02 billion, a substantial 92.5 percent of the overall funding raised. 

The problem is long standing. 

Alongside, the number of startups founded by women has progressively dropped since 2018. Cumulatively, this drop has been approximately 67 percent over three years. 

While the drop, in part, is a consequence of the COVID-19 pandemic, the fall has been more pronounced since 2019 for female-led startups.

The lack of diversity in funding is also to blame.

Of the $66.76 billion raised in 2018, startups with women as co-founders accounted for only close to six percent, and solo women founders accounted for a measly 0.78 percent of that pie. In comparison, solo male founders accounted for 27.4 percent of the money raised.

It's clear that the chances of only women founders raising capital is lower. 

The coronavirus pandemic, the subsequent lockdowns, and severe restrictions on business have hit women entrepreneurs hard. 

Despite reports of renewed focus on empowering entrepreneurship for women, funding for women-founded and co-founded startups fell almost 24 percent to $280 million in the first six months of 2020 compared to $369 million in the first half of 2019.

The dip in stages

In Q1: 2022 Of the 16 deals raised by solo women founders, none were late or growth-stage capital; they were early-stage deals. 

Of all the 78 deals raised by women-founded and co-founded startups, 66 were early-stage deals amounting to $315.54 million, 4 were late-stage deals amounting to $303 million, six were growth-stage deals amounting to $124 million, and two were debt-financing deals of $9 million. 

However, the numbers are significantly better when compared to Q1:2021. 

Then, of the 44 deals amounting to $218.19 million, two were late-stage deals amounting to $2.71 million, four were growth-stage deals amounting to $122.22 million, and a whopping 35 were early-stage deals that amounted only to $6.37 million. Also in Q1:2021, there were three debt deals amounting to $506,000. 

If we look at the rounds, pre-Series A accounted for 51 deals (amounting to $4.9 million), 14 deals of higher value amounting to $285.2 million, including the $52 million raised by Mamaearth, $95 million by Amagi, $40 million by Qure.AI, and Finova’s $56 million. 

These are good numbers in terms of value, but these startups are not run solely by women founders. 

D2C rules the roost

In Q1:2022, the D2C sector predominated the number of deals by women founded-startups, with 20, amounting to $108.13 million. This was followed by nine fintech deals amounting to $275.62 million, 8 healthcare deals of $59.9 million, six ecommerce deals of $18.8 million, six edtech deals of $106.64 million, and five SaaS deals of $134.92 million. 

Overall, in all the deals, 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 FY22’s total funding value and volume respectively.

Interestingly, the top five sectors saw a 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 sectors include 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).

The way ahead

Many are realising that there is a need to change the way we look at women entrepreneurs and funding opportunities for women. Fund houses have started allocating funds specifically for women-led startups. These include the likes of Sequoia India Capital with Spark, and Kalaari Capital with its CXXO fund. 

Apart from providing funding and investment to these women-led firms, they also are building a mentorship network that helps these startups with hiring, understanding scale, building for scale, and negotiations. 

There are also women-specific funds like She Capital, founded by Anisha Singh, who had earlier founded the startup Mydala. WeHub in Hyderabad, Telangana, is focused on creating an accelerator and growth path for women entrepreneurs. 

To create more entrepreneurs, there also is a need to ensure there are more women decision makers and people at CXO levels. 

Communities like YourStory Elevate help, with a focus on ensuring that more women in middle-management positions take up senior roles. With more women leaders at the forefront, the chances of the leaders starting up on their own also increase.

Edited by Teja Lele