Bangalore: venture capital funding In Indian Startups That fell 37% to $6.9 billion in the second quarter of this year, according to data from research firm Venture Intelligence.

In the first quarter, total investments in startups stood at $11 billion.

For the first half of the year, total investments stood at $17.9 billion, up 36% from the same period last year.

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Reported on 30th May that VC firms had begun to tighten funding taps of Indian startups, because of adverse macroeconomic conditions, especially interest rate hikes. US Federal Reserve And declines in publicly traded technology stocks around the world continued to dampen sentiment.

“There are a number of external factors that are freezing this (funding)… it is reasonable to expect that this will last for the next 12 months,” said Sanjay Swamy, managing partner, Prime Venture Partners.

Over the past few months, several top-tier global venture capital firms including: Sequoia CapitalY Combinator and Binext have issued warning notes to portfolio companies to avoid a ‘funding winter’.

The unicorn round, which was valued at around $1 billion or more, has also stalled in the second quarter, according to industry tracker Tracxn, with only four new unicorns mined in the second quarter, compared to 12 for the same period last year. in comparison.

initial stage speed

The early stage funding, however, was a silver lining in the current market downturn.

Funding for early-stage startups declined marginally to $839 million in the April-June period from $856 million in the previous quarter, but this is 30% higher than the total funding for the segment in the last quarter of 2021. Venture Intelligence.

Total investment in early-stage startups in the April-June period has more than doubled from the same period last year, driven largely by growth and late-stage investors, including Tiger Global, Sequoia, among others. Excited about early stage opportunities.

“The reason for the increase in early-stage activity is clear that Tier-1 funds want to get in early. Most of them today accelerated their fund allocation to seed for early stage opportunities. However, how the deployment progresses (for Tier 1 funds) will largely depend on how many of their portfolio companies move from seed to Series A and into the growth phases,” said Ganapathi Venugopal, cofounder and chief of Axilar Ventures said the executive officer.

In the past six months, several top venture capital funds including

Elevation Capital, Athera Venture Partners (formerly Inventus Capital), has closed its latest fund and increased its corpus on the back of a record-breaking funding year for Indian startups.

“Venture capital firms that have raised funds cannot wait as startup investments have the longest exit period. The clock is ticking on deployment (for them) too,” said Amit Navka, Partner, Deals and Startups Leader, PwC India.

“For large funds (above $300 million), the strategy may not be limited to simply cutting a $2-$3 million check, as the size of the portfolio becomes volatile,” said Swati Murarka, vice president of Athera Venture Partners.

late-stage affected

Late-stage rounds are suppressed, as investors reevaluate valuations amid bleak exit results via public market listings.

In the second quarter, there were 19 funding rounds of $100 million or more, totaling $3.6 billion, compared to 29 such deals worth $6.7 billion in the January-March period this year, according to data from Venture Intelligence.

This is also a drop compared to the second quarter of 2021, when Indian startups raised $5.3 billion in 24 deals worth $100 million or more.

“Latecomers are worried as they see a rapid exit and the public markets currently underperform,” Navka said.

A slowdown in late-stage funding was forecast in early December 2021 when US technology stocks were being short. Typically, private valuations are reset after a gap of four to six months to that of the public markets.

“Most late stage investors are now taking their time to decide on their bets, which they are doing, given that there is no fear of missing out in the current market environment. They renegotiate valuations. are taking time to do, and it has now turned into an investor market,” said Venugopal of Exilor Ventures.