Funding winter is here for tech startups and will go on for 12-18 months: Tracxn

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Funding winter is here for tech startups and will go on for 12-18 months: Tracxn
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  • The quarterly funding for the tech sector peaked in Q3 2021 at $14.8 billion and has been on a steady decline since then, says Tracxn.
  • August 2022 witnessed $885 million in funding with 102 funding rounds and 9 acquisitions.
  • Bangalore leads in the total funds raised, followed by Mumbai and Delhi.
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  • Beenext, LetsVenture, Accel, Blume Ventures lead VC funding for August in India.
India is currently experiencing a funding winter across tech startups which is expected to continue for the next 12-18 months, says a report by Traxcn.

In the thick of the pandemic, the quarterly funding for tech startups peaked in July September quarter of 2021, at $14.8 billion and it’s been on a steady decline since then, the report said.

In the next two quarters that followed, the average funds raised was around $10 billion, which dropped to $6.48 in the April-June quarter. In the current quarter, it’s all set to become leaner as startups raised only $2 billion quarter to date with only one month to go.

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In August, Indian tech startups raised $885 million and only a sliver of the companies surveyed by Tracxn received funding. Out of the 100,000 companies surveyed, only 10,000 received funding since last year.

Funding winter is here for tech startups and will go on for 12-18 months: Tracxn

Tech startups that beat the funding winter
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Despite the funding winter, edtech unicorn UpGrad was able to raise $210 million last month in addition to raising $225 million in June this year. UpGrad plans to achieve $500 million in gross revenue in FY23. The company also wishes to hire 2,800 full time and part-time faculty in the next three months.

Pune-based fintech startup EarlySalary also raised a $110 million this month. It provides instant loans to young salaried individuals.

“The most funded business models in the past one year are online test preparation courses, vernacular content sharing platforms, ultra fast grocery delivery, digital wallets and hyperlocal delivery platforms,” the report stated.

India has 85 unicorns, 268 soonicorns and 938 minicorns, Tracxn revealed.

Top Indian cities that raised funding
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Out of the surveyed cities, Bangalore led the funding rounds with the maximum amount of investment raised. Delhi-NCR, Mumbai and Gurgaon came a close second.

CitiesFunding
Bangalore36 Rounds, $234 million
Delhi NCR24 Rounds, $124 million
Mumbai21 Rounds, $364 million
Gurgaon 11 Rounds, $50.5 million

In the month of August, the top startups that raised funding were: edtech company Upgrad, neo fintech company EarlySalary, soonicorn device management company Servify and genetic testing company MedGenome.

August 2022 funding leaderboard

StartupFunding raised Aug 2022
upGrad$210 million - Series F
EarlySalary$110 million - Series D
Servify$65 million - Series D
MedGenome $50 million - Series D

The top investors for the Indian tech space last month were AngelList with 313 investments; and LetsVenture with 303 investments. Beenext, LetsVenture, Accel, Blume Ventures are the leading venture capitalists within the Indian tech industry.
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