To a shock, the startup funding in Q1 ecosystem has successfully created 14 unicorns in the first three booming months of the year 2022, and for the three consecutive years in a row, the startup funding in Q1 has crossed $10 billion. They have received a total of USD 10 billion across 334 funding deals.
Startup funding in Q1 was raised in the third quarter of 2009, investing a total of US $ 10.9 billion in 347 transactions. According to PwC India, the initial investment in the quarter is over $ 10 billion. That’s twice the amount of money received in the third quarter startup funding in Q1 in year 2020, and that was about 41% higher than in the second quarter of 2021, according to the results of a report titled Startup Perspectives Q3CY21.
Increased lending activity was seen in all sectors, both in terms of value and quantity. However, in Indian startup funding in Q1, companies like fintech, edtech, and SaaS are among the top three investment sectors of CY21, accounting for about 47% of total treasury activity. In the fintech sector, funding raised in the first three quarters of 2009 has quadrupled compared to the first three-quarters of CY20. In addition, six fintech companies attained unicorn status.
Amit Nawka, Partner of PwC India-Deals & Startups Leader, describes the startup investment to date in 2021 and that investors are a big way. Trading activity across the sector has increased since the beginning of the year, with larger average trading sizes and faster funding rounds. “
Amit Nawka further said that as more startups mature, the talks around corporate governance are now becoming mainstream. Therefore, it will become increasingly considerable and essential for the startups to design a corporate governance roadmap that is in sync with the growth of the organization.
Startup Funding in Q1
The year 2022 is the third consecutive year when the startup funding in Q1 has grossed over USD 10 billion in fresh funding. As per the reports, the quarter also has seen as many as 14 startups becoming unicorns, adding the total startup funding in Q1 stands at USD 10.8 billion.
As per the agency, the quarter saw maximum startup funding in Q1 the funds are flowing into the software-as-a-service (Saas) companies, grossing more than USD 3.5 billion. In addition, the creation of unicorns continued to flourish, with 14 startups attaining the coveted startup funding in Q1, with the Saas sector accounting for the largest share creating five unicorns.
Investment in the SaaS ecosystem has tripled over the last three years. He added that the pandemic has only boosted this ecosystem globally, given the increasing importance of remote work, productivity, and overall digital transformation. Last year, 15 SaaS companies in the unicorn category were born in the country, including Darwinbox, Fractal, Uniphore, Hasura and Amagi Media Labs.
With Freshworks listing on Nasdaq in late 2021, mature SaaS providers are increasingly considering listing. Approximately 80 M & A transactions were recorded in the startup ecosystem in the first quarter. Roll-up e-commerce companies primarily drove this. And Curefoods, Mensa Brands, GlobalBees and MyGlamm have mergers and acquisitions as their core business strategies and continue to be the top acquirers in the first quarter. At the same time, Upscale and Evenflow are other roll-up e-commerce companies.
38% of mergers and acquisitions in the first quarter were e-commerce and direct sales, and 22% of transactions were SaaS. In addition, 4,444 growth and early-stage start-ups accounted for 89% of first-quarter funding and 44% of the total trading volume. Growth-stage startup funding in Q1 totalled $ 6.57 billion over the last three quarters, with an average ticket size of $ 5570 million, while early-stage funding had an inflow of approximately $ 731 million.
According to a survey focused on startup funding in Q1 in the country, software service start-ups have gained substantial traction this year, raising nearly $ 4 billion in funding. In 2021, 15 software service providers exceeded the $ 1 billion valuation standard. Not only are some of these companies well known in the industry, but so are other companies such as Darwinbox and Uniphore.
Experts say companies are still attractive investments, especially given that many of these companies still remain, despite other factors such as current geopolitical scenarios and rising oil prices. To show that, we admire the talent pool of government and Indian start-ups. Operations were in the very early stages of expansion. Many experts also want government intervention to help these companies spread their wings, grow as hubs, and grow and spread a culture of startup growth throughout India.
Governments need to engage companies from bottom to top and support their growth this is because it helps the government in terms of GDP and contributes to excellent employment opportunities, especially when many people are looking for it after the enterprise. Work after being fired for a coronavirus pandemic. Successful completion of 80 mergers and acquisitions in the country during the quarter. The companies involved in these transactions include Mensa and Global Bee, both of which acquired unicorn status in the second half of the fourth quarter of 2021.
Startup funding of Fintech investment
FinTech investment in India increased exponentially in 2009. In the first three quarters of 2021, $ 4.6 billion worth of investment was recorded in FinTech Space, nearly tripling from $ 1.6 billion in 2020. A total of $ 2.5 billion value of assets in 53 completed transactions were recorded at various investment stages in the third quarter alone.
In the FinTech ecosystem, investments are seen across the business spectrum. As a result, investors renew interest in companies operating in the InsurTech, WealthTech, Neobanking and Financial Technology Enabler segments.
Approximately 84% of funding activities were driven by growth and recent transactions. However, these represented about 39 per cent of the total deal activity. Almost 61 per cent of the entire deal activity consisted of the early-stage funding rounds for $1.6 billion early-stage or seed companies. PreIPO round raised $880 million in CY21 by companies nearing IPOOla cabs, Droom, Pine Labs.
Cities like Bengaluru and NCR continue to be the critical startup cities in India. Together, they contribute around 76–78 per cent of the total funding activity in the first three quarters of CY20 and CY21, followed by Mumbai and Pune. Global and Indian unicorns.
114 private startups became unicorns in CY20. However, that number increased dramatically in 2021 as 371 startups were already unicorns in the first three-quarters of CY21. Geographically, most of the Q3CY21 unicorns come from the United States, with India second.
FinTech and SaaS are the most representative sectors in the third quarter of 2009, both globally and in India. In 2021, three Decacorns, all from China and Hong Kong, were added. Currently, there are two big corns, Paytm and Byjus, in India.
edited and proofread by nikita sharma