Indian startups raised $3 billion in overall funding in Q3 2022 (July-September), 57% lower compared with the previous quarter, according to private market tracker Tracxn’s Quarterly India Tech report.

The average ticket size also saw a drop across all funding stages, with the late stage seeing the biggest drop of over 70%, from $142 million in Q3 of 2021 to $42 million in Q3 of 2022, indicating that investors are not willing to make large investments till economic conditions stabilise.

The three sectors that received the maximum funding in this quarter were alternative lending, genomics and payments. Genomics is an upcoming sector with great potential, but remained untapped by investors till now. It saw maximum interest in Q3 2022, receiving over $231 million in funding, which is higher than the total funding received in 2021. 

Also Read| MSME Minister Rane calls for increase in MSME production and exports

The five companies that raised funding rounds of over $100 million this quarter include EarlySalary, 5ire, InsuranceDekho, OneCard, and BookMyShow, with the most active investors being Better Capital, Venture Catalysts and Surge. Out of the 334 funding rounds closed in Q3, the top 3 funding rounds were completed by EarlySalary ($110 million- Series D), CleverTap ($105 million- Series D), and OneCard ($102million- Series D). 

Around 109 startups closed their first funding round, while three startups turned unicorns during Q3. Another 39 startups got acquired, and two filed for IPOs. Molbio Diagnostics, 5ire and OneCard turned unicorns, and Zopper, LifeCell, Jar, DotPe, Vegrow Bigspoon, InsuranceDekho, CUSMAT, Airtribe and Serentica Global joined the Soonicorn club (startups expected to turn unicorn in near future).

“Our quarterly startup report confirms India is currently experiencing a funding slowdown which is expected to continue for the next 12-18 months and the effects of the funding slowdown are expected to intensify going forward. Executives across the world anticipate a recession in near future and are making preparations to cut costs,” Neha Singh, co-founder, Tracxn, said. 

The funding rounds fell by 15% to 98, against August 2022, and 57% against September 2021. 

Bengaluru-based shared micro-mobility operator Yulu Bikes raised a large round of $83 million as a part of its Series B fundraise. There were 17 acquisitions in September 2022 with Razorpay continuing its acquisition spree by acquiring PoshVine (a loyalty management platform), its fourth acquisition in 2022 and seventh to date. 

Another big acquisition was Insight Cosmetics (internet-first cosmetics company) by Reliance Retail. Two companies, Kore Mobile and DreamFolks, were the only two startups in the quarter that went public in September, bringing the total to 10 tech IPOs this year, as opposed to seven last year.

Also Read| Jio 5G network records top median speed of about 600 mbps, Airtel 516 mbps: Ookla

“The Indian startup ecosystem is still experiencing the ongoing funding slowdown and the  severe macroeconomic conditions gripping the West. We are seeing large PE and VC funds treading cautiously…We expect this to continue until we see signs of stabilisation globally,” Abhishek Goyal, co-founder, Tracxn, said. 

Bengaluru, Mumbai and Delhi-NCR were the top cities attracting maximum investments, as per the report with Blume Ventures topping the investment charts in seed-stage startups, Sequoia Capital ranked highest in the early-stage startup funding and GIC leading the late-stage funding.