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As start-up funding scenario worsen, crypto in India to bite the bullet

As per a recent PwC India report investment fell as low as 40% to $6.8 billion between April-June, 2022.

The Indian start-up ecosystem depends heavily on the dollar economy, and the majority of venture capital firms managing the money of global LPs and GPs are foreign-based.
The Indian start-up ecosystem depends heavily on the dollar economy, and the majority of venture capital firms managing the money of global LPs and GPs are foreign-based.

Geopolitical unrest repercussions amid economic downturn add to that the monetary policy of the Indian government is believed to be some of the key reasons behind the sharp decline in the start-up ecosystem. As per a recent PwC India report investment fell as low as 40% to $6.8 billion between April-June, 2022.  “The dollar appreciation vs Indian rupee and rising Indian interest rates are further responsible,” Raj A Kapoor, founder, India Blockchain Alliance, a think-tank,told FE Digital Currency.

Only four startups in India attained unicorn status in Q2,CY22, mirroring a global trend in decline in the number of new unicorns this last quarter. “The ecosystem will require a good 12-15 month to recalibrate from the present scenario. The various macro-economic indices present a veritable slow haul and a long ‘crypto winter’,” Kapoor stated.

Industry experts anticipate going forward, valuation would become more realistic and a lot of wheat will be separated from the chaff. For later-stage businesses, there will be a dearth of large strategic and secondary transactions. Furthermore, it is believed that IPO exits will be delayed or postponed, and valuations will decline.

Globally, the total unicorn count has crossed 1,200 with maximum in Q2 CY22 operational in the SaaS sector, followed by fintech. In Mumbai, the report said, more than $100 million was raised by four companies each, including upGrad, Zepto, CoinDCX and Turtlemint. “Due to current federal policy, market liquidity has significantly decreased which has caused a temporary suspension in funding,” Gaurav Mehta, founder, Catax- Simple Crypto Taxes, an online crypto tax solution, said.  

India’s economy is expected to grow by 6.9% in FY 2022–23 and by 6.2% in FY 2023–24, according to the most recent OECD report. 

It is believed that some exchanges have the financial resources enough to weather the widespread market. In NCR seven companies — Robotics, Absolute Foods, Delhivery, Stashfin, Rario, Grey Orange Fashinza and PhysicsWallah — raised more than $100 million, each. 

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