BENGALURU: Home-grown start-ups witnessed a 75% year-on-year (YoY) decline in funding in the first quarter of 2023 compared to the same quarter last year. They raised $2.8 billion in Q1, 2023, which is a 21% fall from Q4, 2022.
With companies resorting to layoffs to preserve cash, according to the Tracxn report, late-stage funding rounds in the first quarter witnessed a decline of 79% ($1.8 billion) compared to the year-ago period. Early-stage rounds also dropped 68% at $844 million compared to Q1 2022.
Also, there was no single unicorn created in the first quarter compared with 14 unicorns in Q1 2022. The top funding rounds in Q1 includes Lenskart’s $500 million fundraising in Series J round led by a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA) at a valuation of $4.5 billion.
A total of 87 funding rounds took place in March, compared, to 67 in February. The Q1 of 2023 witnessed nine 100M+ funding rounds. Companies such as PhonePe, Lenskart, Mintify, Insurance Dekho, FreshtoHome foods, TI Clean Mobility and KreditBee have managed to raise funds above $100 million in the quarter. PhonePe has raised a total of $650 million in multiple Series D rounds in Q1 of 2023, valuing the company at $12 billion.
Many start-ups have been struggling to raise funds and they have also started firing employees. After laying off employees, Unacdemy co-founder and CEO Gaurav Munjal said, “Today, the global economy is enduring a recession, funding is scarce and running a profitable business is key.
We have to adapt to these changes, build and operate in a much leaner manner so we can truly create value for our users and shareholders.” However, in terms of acquisitions, the report said Q1, 2023, witnessed 46 acquisitions compared with 43 acquisitions in Q4, 2022.
Start-up funding trends
Start-ups raised $1.2 billion in funding in March compared to $598 million in February.
87 funding rounds took place in March as against 67 in February.
Top funding rounds in March were:
$500 mn Lenskart - Series J
$200 mn PhonePe - Series D
$110 mn Mintifi - Series D
Late-stage rounds in Q1, 2023 saw funding of $1.8 bn, a decline of 79% as against Q1,2022