Report card: H1 2022 funding

In the first half of 2022, Indian startups kicked up fundraising with $17.1 billion raised across 891 deals, but the coming quarters will be an acid test for the ecosystem.

Report card: H1 2022 funding

Saturday July 02, 2022,

4 min Read

HODL your FUD. It is a serious case of cryptosis everywhere now. 

Even as Bitcoin, Ethereum, USDT, Solana, and other cryptocurrencies see a rise in reaction to Meta’s NFT launch (brava, Mark Zuckerberg), not everyone is convinced. 

In fact, Reserve Bank of India (RBI) Governor Shaktikanta Das described cryptocurrencies as a "clear danger" in the foreword to the 25th issue of the Financial Stability Report (FSR). 

Incidentally, India’s TDS law on crypto transactions (over Rs 10,000) also came into effect on Thursday. 

Meanwhile, startups raised a staggering $17.1 billion across 891 deals between January and June, 82.8 percent more than the $9.4 billion raised across 541 deals during the first half of last year, according to YourStory Research. 

While the bumper growth in H1 2022 looks compelling, there’s more to the story. 

Deep-dive into H1 2022 funding

According to YourStory Research, Indian startups raised $17.1 billion across 891 deals between January and June, 82.8 percent more than H1 2021. While the bumper growth looks compelling enough to question the ‘funding winter’, the numbers need to be seen in continuity to the second half of 2021, when $22.7 billion were invested through 865 deals.

Fundraising has seen a downtick also in the latest quarter, with May witnessing investments of $1.85 billion, the lowest in any month this year.

However, Sid Talwar, Co-founder and Partner at Lightbox, a Mumbai-based venture capital firm, told YourStory that the worst is yet to come. 

“Honestly, the environment in India is actually robust. There's a massive market, still. Rupee depreciation hasn’t fully had an impact on products and produce. People still need products,” he added.

Key takeaways:

  • A total of 18 Indian startups entered the coveted unicorn club in the first half of 2022, up from 14 in the same period last year. 
  •  In H1 2022, startups raised $709.4 million across 475 deals in Pre-Series A, compared with $242.7 million raised across 245 deals during H1 2021. Late-stage startups raised about $8.31 billion–about 48.5 percent of the total capital secured–in H1 2022.  
  • Sequoia and Tiger Global were the top investors during H1 2022, with 39 and 36 deals, respectively, followed by Kunal Shah with 32 investments. 

Breakup of Top 10 investors in H1 2022

Graphic: Chetan Singh

5 years of GST: Where are we now?

One nation, one market, one tax–the Goods and Services Tax (GST) reached its five-year milestone on July 1. 

The tax structure, which has had many hits and some misses, brought about a paradigm shift in the use of technology to bring about tax compliance. In April 2022, collections touched a record Rs 1.68 lakh crore. 

Key takeaways:

  • In June, the total GST collections totalled Rs 1.4 lakh crore. 
  • India has about 6.3 crore MSMEs that contribute about 30 percent to the country’s GDP. Of these, 88 lakh have registered on the Udyam Registration Portal. 
  • The GST council has met 47 times so far. In its 47th meeting held in Chandigarh a few days ago, the council announced revised rates for some household items. 

Archit Gupta, CEO and Founder of Clear (formerly ClearTax), believes that a lot of MSMEs (micro, small and medium enterprises) have benefited by jumping on to the GST bandwagon. 

“Their ability to transact with customers has improved. They are also able to pass on the credit to their customers. Since buyers and customers are interacting with each other, it has increased the overall level of compliance,” he says. 

gst laws

Influencer Tax 101

From the latest smartphones and jewellery to international trips and luxury hotel stays, social media influencers often receive many perks from the brands they endorse. Now, there’s a price to pay as the income tax department introduces the new Influencer Tax.

During the Union Budget 2022-23, Finance Minister Nirmala Sitharaman announced a tax withholding provision on benefits or perquisites rolled out by businesses, effective July 1. The rate is 10 percent on the value of the benefits or perks.

YourStory breaks down the applicability of this Section 194R of the Income-tax Act, identify situations that could impact emerging sectors, such as the creator economy and direct-to-consumer (D2C) brands, as well as legal requirements for those likely to be impacted by this new regulation.

Key exclusions:

  • Individuals or a Hindu Undivided Family (HUF) operating a business with an annual turnover less than Rs 1 crore, or with earnings below Rs 50 lakh in the previous financial year;
  • The value of the benefit or the perk does not exceed Rs 20,000 in the current financial year;
  • Benefits or perks provided to non-residents; and
  • Benefits or perks provided to employees.

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