In spite of macroeconomic instability and recessionary worry impacting investments, India launched more new unicorns in 2022 than China did for the second consecutive year.
In comparison to China’s 11, 23 Indian companies exceeded the $1 billion valuation threshold to qualify as unicorns. In India, deal value decreased by 33% from $38.5 billion in 2021 to $25.7 billion in 2022.
In 2022, there was a decline in funding overall, which was primarily caused by a decline in late-stage major acquisitions. The ecosystem saw fundamental changes as VCs shifted their attention to unit economics and start-ups experienced a difficult year marked by numerous regulatory obstacles, layoffs, and emerging corporate governance issues.
The decline in funding was largely over the second half (H2) of 2022 when macro headwinds intensified. Early-stage investments continued despite the decline, pushing total VC deals in the year to more than 1600.
While macro headwinds will continue to affect India going forward, we think 2023 could see the birth of a more resilient ecosystem there. As long as stakeholders maintain their cautious optimism, a more resilient ecosystem will probably start to emerge in 2023. Investors are predicted to increase their focus on early-stage deal-making and place wagers in emerging industries including gaming (hyper casual games, e-sports), health-tech, electric vehicles (EVs), and AI-led use-cases that are likely to attract interest.
Software-as-a-service (SaaS) and fintech continued to gain ground compared to 2021, increasing their percentage of total funding from 25% to 35% in 2022.
Due to policy-driven cost competitiveness, growth in adoption driven by novel business models, and increased interest across the value chain, the electric vehicle industry saw a 2.4-fold increase in overall investment value.
Starting-ups in the agriculture technology industry received some of the biggest funding in 2022, with total investments exceeding $500 million.