India’s fledgling economy is staring at deeper funding in winter 2023


  • Thousands lost their jobs amid a deepening 2022 funding winter amid mass layoffs by the tech companies.
  • This is reported by a PwC India report, seed funding in India reached a two-year low of $2.7 billion in the third quarter of 2022.
  • Seed stage rounds also contracted, falling 38 percent compared to the previous year.

Indian startups, which saw a massive 35 percent drop in funding in 2022 – from $37.2 billion in 2021 to $24.7 billion (until November) – are bracing for a deepening funding winter in 2023 as fears of a recession looming.

While some startups, such as fintech platform CreditBee ($200 million), Foodtech platform HealthKart ($135 million) and HRtech software-as-a-service (SaaS) platform BetterPlace ($40 million) raised significant funds in December last year and the scene was over by early January generally grim as VC money has been squeezed.

Thousands lost their jobs during a deepening funding winter in 2022 amid mass layoffs by the tech companies, which continues today.

In the third quarter of 2022, seed funding in India hit a two-year low of $2.7 billion, according to a report by PwC India.

In 2022, the significant drop in funding was attributed to a decline in late-stage investments, which fell 45 percent from $29.3 billion in January-November 2021 to $16.1 billion for the same period this year, according to data from Tracxna leading global market intelligence platform.

Seed stage rounds also contracted, falling 38 percent compared to the previous year.

According to the report, 22 startups have joined the unicorn club in 2022, up from 46 in the previous year. .

The number of funding rounds fell 30 percent, from 2,647 last year to 1,841 this year, the report said.

“The funding winter, which began in the fourth quarter of 2021, will continue into 2023 as well. To survive the drought, startups are taking unit economics more seriously, exemplified by the series of massive layoffs that have occurred this year,” said Neha Singhco-founder, Tracxn.

“While we are currently going through a slump, the situation is pushing startups to embark on clearer and more sustainable growth paths as investor evaluation metrics begin to emphasize good profitability over growth at all costs,” Singh said in a statement.

The startup ecosystem’s funding winter could last another 12 to 18 months and the industry could face “a lot of turmoil and volatility,” Flipkart CEO Kalyan Krishnamurthy recently warned.

According to Shrijay ShethFounder,, 2023 will continue to be the year of livelihood for most, and financiers will continue to be more cautious.

“Both valuation multipliers and financing options will become more conservative. Startups need to build better economic units as opposed to costly acquisition-driven growth channels. Geopolitical issues, global supply chain crisis and other macro issues are expected to gain the upper hand,” he said.

However, this should also be seen as a year where resilient, innovative and problem-solving entrepreneurs have the opportunity to stand out from the crowd.

“As the macro environment becomes tougher, we can expect some excellent business models to outshine the rest with a high degree of innovation and austerity. In addition, the serious finance houses in particular will prevail, while we will see visitors in the VC world take a break take,” Sheth noted.

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