There were no new unicorns created in the January-March period, compared with 14 unicorns in Q1 2022…reports Asian Lite News
Indian startups raised a total of $2.8 billion in funds in the first quarter of 2023, a massive 75 per cent lower compared to the same period in the previous year ($11.9 billion), as rising inflation and interest rates continue to impact investments significantly amid a deepening funding winter, a report showed on Monday.
There were no new unicorns created in the January-March period, compared with 14 unicorns in Q1 2022, according to the report by Tracxn, a leading global market intelligence platform.
The funding volumes contracted due to the reduction in late-stage funding, which declined by 79 per cent in the first quarter ($1.8 billion) compared to Q1 2022.
Early-stage rounds saw funding of $844 million, a drop of 4 per cent compared to Q4 2022 but a drop of 68 per cent compared to Q1 of 2022.
Moreover, seed funding rounds in Q1 2023 saw funding of $153 million, a 16 per cent drop from Q4 2022. Although funding has decreased YoY, the MoM comparison is more promising as Indian startups saw a significant uptick of 54 per cent from $777 million in February 2023 to $1.2 billion in March 2023.
Late-stage rounds in Q1 of 2023 saw funding of $1.8 billion, a decline of 79 per cent compared to Q1 of 2022 and a 23 per cent drop compared to Q4 last year.
Total funding declined by 21 per cent in Q1 2023 as compared to Q4 2022, the report mentioned.
Although funding has decreased YoY, the month-on-month funding in the Indian startup ecosystem was a significant uptick of 54 per cent from $777 million in February to $1.2 billion in March.
The quarter witnessed nine, more than $100 million funding rounds with companies like PhonePe, Lenskart, Mintify, Insurance Dekho, FreshtoHome foods, TI Clean Mobility and KreditBee sourcing big-ticket deals.
PhonePe raised a total of $650 million in multiple Series D rounds in Q1 of 2023, valuing the company at $12 billion.
Lenskart raised $500 million in Series J round led by a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA) at a valuation of $4.5 billion, the Tracxn report mentioned.
The leading sectors in terms of funding this quarter were fintech, retail and enterprise applications.
The fintech segment witnessed a funding growth of 150 per cent compared to Q4 of 2022; however, this is a drop of 51 per cent compared to Q1 2022.
In terms of exits, the scenario has remained stable for acquisitions QoQ as 46 acquisitions took place compared to the 43 in Q4 2022, the report said.
No end to layoffs
There is no stopping layoffs at the Indian startups and more than 24,250 employees have so far lost their jobs in the homegrown start-up ecosystem.
According to latest data from leading startup coverage portal Inc42, 24,256 employees have been laid off by 84 startups till date.
The list of startups sacking employees is only growing in the country.
Leading digital healthcare platform Practo has laid off 41 employees, mostly engineers, as part of the company’s continuous performance management and planning process, as the funding winter continues.
Homegrown quick-grocery delivery provider Dunzo has laid off at least 30 per cent of its workforce, nearly 300 employees, after it raised $75 million in a fresh funding round.
According to reports, Bengaluru-based ZestMoney is laying off 20 per cent of its workforce, which will impact nearly 100 employees.
Homegrown fantasy e-sports startup FanClash has laid off about 75 per cent of its workforce, the media reported.
According to Inc42, citing sources, the startup laid off about 100 employees in three rounds, with the impacted employees receiving a two-month salary as a severance package.
Late last month, Gaurav Munjal, Co-Founder and CEO of Unacademy, announced to reduce the size of the team by 12 per cent or more than 350 employees to “meet the goals we are chasing in the current realities we face”.
The startups that lead the layoff tally include BYJU’S, Ola, OYO, Meesho, MPL, LivSpace, Innovaccer, Udaan, Unacademy and Vedantu, among others.
Home interiors and renovation platform Livspace recently laid off at least 100 employees as part of cost-cutting measures.
SaaS platform for online stores Dukaan, laid off nearly 30 per cent of its workforce, or around 60 employees — its second layoff in nearly six months.
Healthcare unicorn Pristyn Care sacked up to 350 employees across departments and impacted employees from sales, tech and product teams.
Online higher education company upGrad laid off nearly 30 per cent of its workforce at its subsidiary “Campus”.