Even though the year was characterised by a downturn in the capital markets, India accounted for 20% of total venture capital (VC) funding in the APAC region for the first time in 2022. According to the latest "India Venture Capital 2023" report from IVCA and Bain & Co., 5% of all venture capital investments worldwide went into India. India's quick embrace of internet-enabled services and the global China Plus One strategy both played a significant role in this expansion. Moreover, India added more unicorns (23) than China did for the second year in a row (11). This, despite the fact that no new unicorns were added by India in the last quarter of 2022.
The industries with the greatest funding last year were SaaS and fintech. Among the emerging industries, the funding for electric vehicles increased by 2.4 times thanks to governmental assistance and rising activity in India's EV value chain. In addition, there were significant early-stage deals in a variety of industries, including agritech, spacetech, generative AI, and climate-tech.
However, as investors pushed for better unit economics and a path to profitability, funding for consumer tech (which includes e-commerce, edtech, D2C, food delivery, etc.) fell by 55%, from more than $20 billion in 2021 to less than $10 billion in 2021.
Even while late-stage funding was affected by the recession, early-stage deals continued to expand. In 2022, early-stage firms accounted for more than 80% of deals for prestigious funds including Sequoia Capital, Accel India, and Lightspeed Venture Partners.
With the establishment of new funds like the Artha Select Fund ($55 million corpus), Auxano Fund ($25 million corpus), and others, the micro-VC ecosystem also grew. Family offices, corporate VCs, and new funds all continued to be active, taking part in more than 300 deals.
Assuming stakeholders maintain their cautious optimism, Sriwatsan Krishnan, Partner at Bain & Company, predicted that a more resilient ecosystem will develop in 2023.
