Inc42's Q3 2022 Funding Report.pdf

Q3 2022
INDIAN TECH STARTUP
FUNDING
REPORT
Q3
2022

TableOfContents
TableOfContents
01
02
03
04
05
06
08
09
10
11
12
13
07
TableOfContents
TableOfContents
INDIA’S DIGITAL ECONOMY IN A NUTSHELL
SNAPSHOT OF INDIAN STARTUP ECOSYSTEM Q3 2022
TOP 10 BIGGEST FUNDING ROUNDS OF Q3 2022
Q3 2022: FUNDING & DEAL COUNT TRENDS
Q3 2022: FUNDING STAGE WISE ANALYSIS
Q3 2022: SECTOR STAGE WISE ANALYSIS
Q3 2022: STARTUP HUB WISE ANALYSIS
MOST ACTIVE INDIAN STARTUP INVESTORS IN Q3 2022
Q3 2022: MERGERS & ACQUISITIONS
THE STATE OF INDIAN UNICORNS & SOONICORNS
INDIA'S UNICORN CLUB - AN OVERVIEW
INDIAN STARTUP INVESTOR SENTIMENT SURVEY Q3 2022
KEY DEVELOPMENTS FROM THE INDIAN STARTUP ECOSYSTEM
© INC42 MEDIA | NOT FOR DISTRIBUTION / 2

India’s Digital Economy In A Nutshell
44%
Increase In Internet
Users From 2022 To
2030
61%
Internet Penetration
In India
1.3 Bn+
Internet Users
By 2030
305 Mn+
Users Doing Online
Transactions In
India
4.7 Hours
Average Hours Spent
On Mobile Per Day
Per User
$0.17
Per GB Internet
Cost In India
373 Mn+
Estimated Rural
Internet Users In
2022
$2.3 Tn+
Total Value Of Upi
Transactions As
On Aug. 2022
110 Bn+
Total No. Of UPI
Transaction As On
Aug. 2022
Source: Statista, NPCI, Bain & Company, App Annie, Cable.co UK
Internet
Users
(Mn)
0
500
1,000
1,500
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
846
932
1,008
1,075
1,134
1,186
1,132
1,273
1,310
1,343

Indian Startup Economy Snapshot
Startup Funding M&As & Exits Unicorns & Soonicorns
Total Funding
Raised
$134Bn
Unique Startups
Funded
Total Capital Raised
In Seed Stage
$4.3Bn
In Growth Stage
Total M&As
1,126
Spent On M&As
Total IPOs By
Startups
18
Upcoming Startup
IPOs
Indian Startups That
Have Entered Unicorn
Club To Date
107
Soonicorns In
India
Combined Valuation
Of Unicorns
$344Bn
Combined Valuation
Of Soonicorns
$34Bn+
Note: Funding & M&A data is for the period between 1st January, 2014 and 24th September 2022
$32Bn 22
5.2K $5.7Bn+ 103

Funded Startups In India - Breakdown By Total Funding
26
09 $1 Bn or above
$500 Mn to $999 Mn
$200 Mn to $499 Mn
$100 Mn to $199 Mn
$50 Mn to $99 Mn
$10 to $49 Mn
Under $10 Mn
178
104
1,197
276
4,979
Source: Inc42
Note: Based on Indian startup funding data between 1st January 2014 and 24th September 2022
Investment deals with disclosed funding amount have been taken into consideration

Snapshot Of Indian Startup Ecosystem [Q3 2022]
$3 Bn+ Total Funding
334 Funding Deals
$11 Mn Average Ticket Size
Ecommerce Top Sector
895 Investors Participated
-29% YoY Surge In Investor Count
LetsVenture Most Active
Investor
38 No. Of M&As Recorded
Ecommerce & Enteprisetech
Sector With Most M&As
4
Indian Startups Which
Entered Unicorn Club
SaaS Most Preferred Startup
Sector

Top 10 Biggest Funding Rounds Of Q3 2022
Sector
CompanyName
Edtech
Enterprisetech
Fintech
Deeptech
Fintech
Transport Tech
Healthtech
Fintech
Ecommerce
Consumer Services
Logistics
FundingAmount
$210 Mn
$105 Mn
$100 Mn
$100 Mn
$97 Mn
$82 Mn
$80 Mn
$75 Mn
$70 Mn
$65 Mn
$65 Mn
ETS Global, Bodhi Tree, Kaizen Management Advisors,Temasek, IFC, IIFL
CDPQ, IIFL, Tiger Global, Sequoia India
Temasek, QED Investors, Sequoia Capital, Matrix Partners
SRAM & MRAM Group
TPG Norwest, Norwest Capital, Piramal Capital & Housing
Magna International, Bajaj Auto
OrbiMed
Bessemer Venture Partners, Tiger Global, Blume Ventures
SBI Investment, Trifecta Leaders Fund, Celesta Capital
Singularity Growth Fund, AmTrust, Iron Pillar, BEENEXT
Silicon Valley Bank
NotableParticipatingInvestors
HQ
Mumbai
Mumbai
Pune
Abroad
Mumbai
Bengaluru
Bengaluru
Delhi NCR
Bengaluru
Mumbai
Bengaluru
Source: Inc42
Note: Only disclosed funding deals recorded in our database up to 24 September 2022 is taken into consideration.

Indian Startup Funding Reaches $134 Bn
Funding
Amount
($
Bn)
Deal
Count
0.0
10.0
20.0
30.0
40.0
50.0
0
500
1,000
1,500
2,000
2014 2015 2016 2017 2018 2019 2020 2021 Up to Q3 2022
Funding Amount ($ Bn) Deal Count
Total capital inflows were $22 Bn in 2022 (up to q3), down 19% from $27 Bn
the previous year.
Source: Inc42
Note: The funding data for Q3 2022 is between 1 July 2022 to 24 September 2022
Between 2014 and Q3 2022, Indian startup ecosystem reported 8.8K funding deals to take the total funding raised to $134 Bn

Source: Inc42
Funding Winter Sets In, Indian Startup Funding Drops 82% In Q3 To Reach 2020 Levels
Funding
Amount
($
Bn)
Deal
Count
0.0
5.0
10.0
15.0
20.0
0
200
400
600
Q
1
-
2
0
1
9
Q
2
-
2
0
1
9
Q
3
-
2
0
1
9
Q
4
-
2
0
1
9
Q
1
-
2
0
2
0
Q
2
-
2
0
2
0
Q
3
-
2
0
2
0
Q
4
-
2
0
2
0
Q
1
-
2
0
2
1
Q
2
-
2
0
2
1
Q
3
-
2
0
2
1
Q
4
-
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1
Q
1
-
2
0
2
2
Q
2
-
2
0
2
2
Q
3
-
2
0
2
2
Major correction evident post the historical peak of Q3 2021
After touching historic quarterly peak of $17 Bn In Q3 2021, Indian startup funding continued to fall in Q3 2022

My biggest takeaway from over 10 years of
investing in startups is that early stage investors
should not be paying attention to temporary
fluctuations in the market. There’s no crisis. All
angel investors should be in acceleration mode all
the time.
Sanjay Mehta
Founder, 100X.VC
A bullish mindset is a great competitive
advantage in a bearish market
Rajesh Sawhney
Founder & CEO, GSF Accelerator
Over the last 7-8 years, many startups chased scale
at the expense of the right business model, which
resulted in “dilution”. Startups that should work on
getting their business model right along with scale,
number of customers, revenue per customer and
profitability.
Vidur Vyas
Founder, NorthSide
This is not the time to get paralysed with fear. The founders at early stage should focus on getting the product market fit. Others (at growth
and late stages) should be focused on delivering best value to their associated partners and customers and be careful of the burn.
Madhu Shalini Iyer
Partner, rocketship.vc
The economic slowdown and rationalisation of
valuations in the public market had a direct impact
on investment in growth stage firms. Late stage
investors have become cautious and are taking a
closer look at the sustainability of business models.
Krishna Vinjamuri
Partner, Kae Capital

Indian Startup Funding Deals By Deal Size [Q3 2022]
Source: Inc42
Note: The funding data for Q3 2022 is between 1st July and 24th September 2022
Investment deals with disclosed funding amount have been taken into consideration
Deal Count
Deal Range Deal Count
Deal Range
$100 Mn & above
$50 Mn to $99 Mn
$10 Mn to $49 Mn
04
13
64
$5 Mn to $9 Mn
$1 Mn to $4 Mn
Under $1 Mn
29
102
64

Source: Inc42
Indian Startup Funding Record 82% Year-On-Year Fall In Venture Capital Inflow In Q3 2022
Funding
Amount
($
Bn)
Deal
Count
0
5
10
15
20
0
100
200
300
400
500
Q3 2019 Q3 2020 Q3 2021 Q3 2022
After reaching a historic peak in terms of venture capital inflow and
deal count, Indian startup funding amount and deals recorded a -82%
and -28% plunge respectively in Q3 2022.
Even on a QoQ basis, Indian startup funding recorded a 56% decline in funding amount in Q3 2022 compared to Q2 2022

54% decline year-on-year decline in average ticket size of
Indian startup investments
Source: Inc42
Average Ticket Size Of Indian Startup Funding Deals Drops To $11 Mn
Average
Ticket
Size
($
Mn)
0
10
20
30 Q
1
-
2
0
1
9
Q
2
-
2
0
1
9
Q
3
-
2
0
1
9
Q
4
-
2
0
1
9
Q
1
-
2
0
2
0
Q
2
-
2
0
2
0
Q
3
-
2
0
2
0
Q
4
-
2
0
2
0
Q
1
-
2
0
2
1
Q
2
-
2
0
2
1
Q
3
-
2
0
2
1
Q
4
-
2
0
2
1
Q
1
-
2
0
2
2
Q
2
-
2
0
2
2
Q
3
-
2
0
2
2

$100 Mn & Above: Indian Startups Have Raised 300+ Mega Deals To Date
Mega deals refer to $100 Mn & above funding raised by a startup in a single round
Mega
Deal
Count
0
25
50
75
100
125
2014 2015 2016 2017 2018 2019 2020 2021 2022 (Up to Q3 )
In 2021, the total mega deal count by the end of third quarter
was 68. This the count is already 22% lower.
Source: Inc42

Investors Shy Away From Writing Large Cheques, Mega Deals Drops Drastically
After seeing over 109 mega deals in 2021 alone, Indian startups recorded 53 mega deal in 2022 (up to Sept)
Mega
Deal
Count
0
10
20
30
40
50
Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Q2-2021 Q3-2021 Q4-2021 Q1-2022 Q2-2022 Q3-2022
Mega deal counts down by 90% on year-on-year basis and
79% on quarterly basis.
Source: Inc42
Mega deals refer to $100 Mn & above funding raised by a startup in a single round

Funding Winter Sets In For Indian Startup Economy
Q12022 Q22022 Q32022
Total Funding
Total Deals
Average Ticket Size
Unicorns Minted
M&As Recorded
Mega Deals
$12 Bn (+ 2.9x)
506 (+ 64%)
$24 Mn (+ 41%)
13 (+ 2.1x)
100 (+ 2.7x)
30 (+ 2.7x)
Source: Inc42
Note: The funding data for Q3 2022 is between 1st July and 24th September 2022; +/-X or +/-% here refers to the year-on-year change.
$6.8 Bn (+ 11%)
394 (+ 26%)
$18 Mn (-22%)
4 (-60%)
65 (+ 81%)
19 (+ 5.5%)
$3 Bn (-82%)
334 (-28%)
$11 Mn (-54%)
4 (-69%)
38 (-19%)
4 (-90%)

Funding Winter: Late Stage Funding For Indian Startups Dropped By 91% In
Q3 2022
FundingAmount YoYSurge AverageTicketSize YoYChange
402 Mn
$1.2 Bn
$1.3 Bn
$114 Mn
Seed Stage
Growth Stage
Late Stage
Bridge Funding
21%
-55%
-91%
-41%
175
71
36
52
-11%
-37%
-56%
-29%
Source: Inc42
Except seed stage, funding across stages reported a massive downfall

Funding Winter Sets In: Late Stage Average Ticket Size Drops By 64% In
Q3 2022
FundingAmount
Change(QoQ)
DealCount
Change(QoQ)
$3 Mn
$21 Mn
$34 Mn
$2.8 Mn
Seed Stage
Growth Stage
Late Stage
Bridge Funding
33%
6%
-64%
-10%
Taking both total venture
capital inflow and average
ticket size of investments
into account, late stage
investments have been the
most negatively impacted
funding stage in Q3 2022.
Source: Inc42
Overall, about $1.3 Bn was raised by late stage startups in Q3 2022 compared to $4 Bn raised in Q2 2022 and $14 Bn in Q3 2021

Indian Startup Funding: Top Funded Sectors [Q3 2022]
Funding Amount ($ Mn)
Top
10
Funded
Sectors
(Q3
2022)
Fintech
Enterprisetech
Ecommerce
Edtech
Healthtech
Deeptech
Transport Tech
Logistics
Agritech
Consumer
Services
0 250 500 750 1000
Compared to the Q3 2021, fintech, enterprisetech and ecommerce, recorded
68%, 65% and 93% decline in funding amount, respectively in Q3 2022
Deal Count
Top
10
Funded
Sectors
(Q3
2022)
Ecommerce
Enterprisetech
Fintech
Healthtech
Edtech
Consumer
Services
Transport tech
Deeptech
Agritech
Media &
Entertainment
0 20 40 60 80
Compared to Q3 2021, ecommerce, enterprisetech and fintech, recorded 13%,
3% and 28% decline in funding deals in Q3 2022, respectively.

Indian Startup Funding: Sectors Which Recorded Maximum Seed Stage
Deals In Q3 2022
Fintech, healthtech and enterprisetech, recorded -12%, +280% and +44%
change in funding inflow, respectively, in Q3 2022 compared to Q3 2021.
Compared to Q3 2021, enterprisetech, ecommerce and fintech deal count
reported 9.4%, 14% and -12% change in Q3 2022, respectively.
Top
10
Funded
Sectors
(Q3
2022)
Fintech
Healthtech
Enterprisetech
Ecommerce
Traveltech
Agritech
Deeptech
Consumer
Services
Edtech
Real Estate Tech
0 25 50 75 100 125
Deal Count
Top
10
Funded
Sectors
(Q3
2022)
Enterprisetech
Ecommerce
Fintech
Healthtech
Edtech
Deeptech
Consumer
Services
Transport tech
Media &
Entertainment
Agritech
0 10 20 30 40

Deal Count
Top
10
Funded
Sectors
(Q3
2022)
Enterprisetech
Ecommerce
Fintech
Healthtech
Transport tech
Edtech
Deeptech
Media &
Entertainment
Consumer
Services
Agritech
0 5 10 15 20
Indian Startup Funding: Sectors Which Recorded Maximum Growth Stage Deals In Q3 2022
In Q3 2022, fintech, ecommerce and enterprisetech reported -78%, -48% and
+42% YoY change in funding inflow respectively.
Compared to Q3 2021, enterprisetech, ecommerce and fintech deal count
reported +23%, -24% and -54% change in deal flow respectively in Q3 2022.
Top
10
Funded
Sectors
(Q3
2022)
Fintech
Ecommerce
Enterprisetech
Deeptech
Transport Tech
Agritech
Healthtech
Media &
Entertainment
Edtech
Consumer Internet
0 50 100 150 200 250

Indian Startup Funding: Top Startup Hubs [Q3 2022]
Top
10
Funded
Hubs
(Q3
2022)
Bengaluru
Mumbai
Delhi NCR
Pune
Hyderabad
Chennai
Ahmedabad
Kolkata
Surat
Kochi
0 250 500 750 1,000 1,250
Deal Count
Top
10
Funded
Hubs
(Q3
2022)
Bengaluru
Delhi NCR
Mumbai
Pune
Chennai
Hyderabad
Ahmedabad
Kolkata
Jaipur
Surat
0 25 50 75 100

Pune Was The Most Promising Emerging Startup Hub In Q3 2022
TotalFundingQ32022 YoY%Change NotableStartupsFunded
$184 Mn
$90 Mn
$48 Mn
$29 Mn
$16 Mn
Pune
Hyderabad
Chennai
Ahmedabad
Kolkata
10%
-7%
-2%
4x
6%
Source: Inc42

Indian Startup M&As Cross 1,100 Mark
M&A
Count
0
50
100
150
200
250
2015 2016 2017 2018 2019 2020 2021 2022 (Up to Q3 2022)
Since 2021, there has been an upwards momentum in mergers and acquisitions in the
Indian startup ecosystem. Demand for investor exits and market consolidation by late
stage startups, have been driving forces behind the rising M&As.

Indian Startup M&As Record 42% Drop In Q3 2022
M&A
Count
0
25
50
75
100
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022

Others
23.7%
Real Estate Tech
5.3%
Fintech
13.2%
Ecommerce & Enterprisetech Startups Recorded Highest M&As In Q3 2022
8
8
6
5
2
9
Ecommerce
21.1%
Enterprisetech
21.1%
Edtech
15.8%
Source: Inc42
38 M&As
(Q3 2022)
Fueled by the growing M&A interest in
segments such as D2C & SaaS, ecommerce and
enterprisetech sector recorded the maximum
consolidation momentum in Q3 2022.

Bengaluru Based Startups Recorded The Highest M&As In Q3 2022
12
8
3
3
2
10
Others
26.3%
Pune
5.3%
Hyderabad
7.9%
Mumbai
7.9%
Bengaluru
31.6%
Delhi NCR
21.1%
38 M&As
(Q3 2022)

The State Of Indian Unicorns & Soonicorns
Unicorns
Combined Valuation
107
$344 Bn
$93 Bn
Top
Hubs
Soonicorns
Combined Valuation
103
$34 Bn
$16 Bn
23 Ecommerce
22 Fintech
20 Enterprisetech
Top
Sectors
33 Fintech
16 Ecommerce
11 Enterprisetech
Top
Sectors
40 Bengaluru
35 Mumbai
17 Delhi NCR
TopHubs
45 Bengaluru
24 Mumbai
20 Delhi NCR

India's Unicorn Momentum Slows Down
Unicorn
Count
0
5
10
15
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022
In the first three quarters of the
calendar year 2021, India witnessed an
inflow of 29 unicorns. Whereas in
2022, the unicorn count by the end of
Q3 2022 stands at 21, a 28% drop
compared to the previous year.
Note: Q3 2022 data is for period between 1st July and 24th September

895 Investors Participated In Startup Funding Deals In Q3 2022t
Compared to the previous year the unique investor count this quarter was 29% lower
Investor
Count
0
500
1,000
1,500
Q1
2021
Q2
2021
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
376
295
90
27
27
81
Others
9.0%
Accelerator +
3.0%
Angel Networks
3.0%
CVC + Corporates
10.0%
Venture Capital
33.0%
Angel Investor
42.0%
895
Unique
Investors
Note: Q3 2022 data is for period between 1st July and 24th September

Landscape Of New Funds Launched In 2022
Sequoia India & SEA
Bertelsmann India
Investments
Elevation Capital Fund VIII
Accel India VII
Jungle Ventures Fund IV
Chiratae Ventures
QED Investors
Lightspeed India [Fund IV]
MV Core Tech Fund–I
Quona Accion Inclusion
Fund III
Tata Capital
Venture Catalysts And
CREDAI Fund
North Eastern Development
Finance Corporation
Limited
Agri Seed Fund
CoinDCX Ventures
CoinSwitch Kuber Fund
Agility Ventures
ah! Ventures
Alternative Investment Fund
Digital Futurists Angels
Network
Peaceful Progress
Stride Ventures India [Fund
II]
AIF Grand Anicut Fund II
Anicut Capital
General Atlantic
Lighthouse Funds [Fund-IV]
OAKS Consumer Fund
Xponentia Capital Partners
[Fund-II]
SSIP 2.0
Maharashtra Innovation and
Technological Development
Fund
State Startup Hub
India WaterPitch-Pilot-Scale
Startup Challenge
VC Fund CVC Fund Angel Fund Debt Fund PE Fund Govt. Fund

Total Worth Of New Funds Launched 2021 vs 2022
Compared to the annual total of CY
2021, the number of new VC Funds was
2.2x higher. From 33 in 2021 to 71 up to
the third quarter of calendar year 2022
Total
Worth
Of
New
Funds
Launched
($
Bn)
0
5
10
15
20
2021 2022 (Up to Q3)
+2.6x
Note: 2022 data is until 24th September

Most Active Indian Startup Investors [Q3 2022]
CompanyName NotableStartupsInvested
DealCount
58
36
22
20
20
20
20
17
17
15

DealCount
14
14
12
11
11
10
10
10
10
10
10
Undisclosed

DealCount
9
9
8
8
8
7
6
6
5
5
Undisclosed
Source: Inc42
Note: This ranking is done based on the deals recorded in our internal database and the quarterly investor ranking survey.

Q3 2022 Investor Sentiment Survey
73% Indian startup investors invested more in Q3 2022 compared to Q3 2021
SaaS Startup sector Indian investors are most bullish about
50% Indian startup investors believe global economic slowdown to put distress
on local startup ecosystem
73% Indian investors believe that there is a negative sentiment towards startup
IPOs in FY23
90% Indian startup investors foresee strong momentum towards M&As in FY23
58% Indian startup investors believe late stage startups’ need to scale and grow
as primary reason for M&A growth in the ecosystem
Source: Inc42’s Most Active Indian Investors Ranking Q3 2022
Note: This analysis is based on inputs from 30 active venture capital and venture debt firms in India
₹

Indian Investors Believe There Is A Negative Sentiment Towards Startup
IPOs In FY23
No
26.7%
Yes
73.3%
Indian
Investors
The Federal Reserve in the United States
raised interest rates aggressively (the
highest increase since 1980). The rising
dollar (USD) is expected to have a
negative impact on all major economies.
As a result, a negative investor
sentiment toward high-cash-burning
businesses such as Indian tech startups
is expected to persist as more countries
implement inflation-control measures.
Source: Inc42’s Most Active Indian Investors Ranking Survey Q3 2022
Note: This analysis is based on the inputs by 30 active Indian VC/VD firms in India
Question: Do you believe that there is a negative market sentiment toward Indian startup IPOs in FY23?

Investors Are Bullish On Indian SaaS Startups
The need for digitalisation infused by
factors such as — the pandemic, GST and
the growing demand for formal credit, have
increased the domestic addressable
market for SaaS startups targeting the
Indian market.
Question: Based on the current market trends, which of the following sector are you most bullish about?
% of total respondents
Most
Bullish
Sector
SaaS
Fintech
Healthtech
Ecommerce
Gaming
Web 3.0/ Blockchain
Logistics
EV
0% 10% 20% 30%

Factors Driving The Negative Sentiment Towards Indian Startup IPOs In FY23
Global market conditions clubbed with
growing concerns over the long-term
profitability of high cash burning
business model of Indian startups is
fueling adverse public market sentiment
toward Indian startups listing publicly.
Question: What is the primary reason behind the negative investor sentiment toward Indian startup IPOs in FY23?
%
of
total
respondents
0%
10%
20%
30%
40%
50%
Macroeconomic
factors (e.g.
anticipated recession,
war etc.)
Concerns over longterm
profitability
Negative coverage of
Indian startups in the
media
Inadequate
understanding of the
startup business model

Indian Startup M&A Momentum Likely To Persist In FY23
Question: Do you think the upward trend in Indian startup mergers and acquisitions (M&As) will continue in the coming quarters of FY23?
An astonishing 90% of the investors who
participated in our latest Q3 2022
investor ranking survey believe that the
number of M&A deals in Indian startup
ecosystem is poised to grow in the
coming quarters of financial year 2023
No
10%
Yes
90%
Indian
Investors

Factors Driving The Positive Momentum Toward M&As In Indian
Startups
The need for market expansion or
consolidation among the late stage
Indian startups is the primary reason for
the growing number of mergers and
acquisitions in the Indian startup
ecosystem.
%
of
total
respondents
0%
20%
40%
60%
Need for market
consolidation among
late stage startups
Increased demand for
investor exit as a result
of the expected
economic slowdown
Venture capital crunch
in the ecosystem
Negative investor
sentiment towards
blitzscaling business
model
Question: What, in your opinion, is the primary reason for the increase in M&As among Indian startups in FY23?

Investment Firms Which Participated In India’s Most Active Investors List, Q3 2022

Key Developments
INR 7,385 Cr Committed To 88 AIFs
India government has committed INR 7,385 Cr to 88 alternative investment funds (AIFs) as part of Fund of Funds for Startups (FFS) scheme. These AIFs, in turn, have
invested INR 11,206 Cr in 720 startups, having a collective corpus of INR 48,000 Cr. FFS scheme was launched under the Startup India initiative in 2016.
AIFs Dilemma Around Co-Investment Exits
Alternative Investment Funds (AIFs) have urged SEBI to reconsider exits around co-investments, wherein currently, co-investors have to offload their shares at the same
time as Alternate Investment Fund (AIF) on the same terms and exit price, reducing the investors’ freedom.
Extension Of AIF Lifecycle
SEBI is considering extending the life-cycle of near-end Alternative Investment Funds (AIFs) for two more years. Until now, SEBI only granted extensions on a
case-to-case basis. As SEBI looks to add another two years to this, AIFs may have a total fund life of 14 years, subject to certain conditions. The current extension marks
a relief for all AIFs who are nearing their end.
Rupee's Free Fall Against Dollar Piles On Pressure On Indian
As of 5 PM on September 26, 2022, the rupee was trading at 81.66 against the USD, its lifetime low level. The market is assessing spillover from the US Federal
Reserve’s hawkish policy stance. Forex market analysts, therefore, believe INR is set to lose more strength in the near term against the US dollar. A depreciating rupee
will slow down growth for startups that are already finding it expensive to scale up, besides impacting margins of companies exporting goods and services. Startups are
likely to see adjustments in their dollar valuations; a weak currency may dislodge some startups from the unicorn club.

More Developments
SEBI has dropped the India connection clause for AIFs and venture capital funds to invest abroad. Indian funds can invest 25% of their funds in foreign companies.
AIFs and VCs can now invest in countries that have signed the IOSCO memorandum and stay away from AML laws deficit countries
SEBI has taken a tough stance on bringing more compliance in the investor ecosystem. It made surprise visits to the offices of 20+ AIFs including private equity (PE)
funds and hedge funds, to check if they were in compliance with certain aspects of the securities laws. While previously it was customary to provide a 10-day notice,
in the last few weeks, SEBI officials have visited these alternative investment funds (AIFs) over complaints against them.
SEBI has asked PE and VC firms to disclose funds’ valuation methodology for startups and the qualifications and position of the valuation agent. SEBI is also
seeking details of changes made by these AIFs in their valuation practices over the past three years
SEBI has also asked Indian private equity (PE) and venture capital (VC) funds to specifically disclose their fund managers’ details. The market regulator wants to
ascertain certain facts including information about the person who owns and controls the fund, his/her nationality, and qualifications.

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Inc42's Q3 2022 Funding Report.pdf

Inc42's Q3 2022 Funding Report.pdf

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