New Delhi: Chennai has emerged as the fastest-growing startup hub in India over a period of eight years, from 2014 to 2022, with a total deal count of over 300 in the period, a new report has highlighted.
Deal count refers to total deals closed with investors.
The report, titled ‘Indian Tech Start-up Funding Report 2022’, released by startup information platform Inc42 Monday, noted that total funding in Chennai-based startups came up to $4 billion between 2014 and 2022. A three-year funding CAGR (compound annual growth rate) of 69 per cent was observed, while prominent investors in the startups were Tiger Global, Sequoia, Chiratae Ventures and Iron Pillar.
Other emerging startup hubs, according to the report, are Pune, Hyderabad, Ahmedabad and Jaipur, in that order.
In 2022, the top five startup hubs in India, according to the report, were Bengaluru, Delhi-NCR, Mumbai, Chennai and Hyderabad, with Chennai registering the highest year-on-year change in terms of total funding amount (182 per cent) and deal count (129 per cent).
The report further pointed out that startup funding deals dropped for all startup hubs in 2022. Compared to the previous year, the deal count across Bengaluru, Delhi-NCR and Mumbai plunged by 14 per cent, 12 per cent and 13 per cent, respectively.
Talking about the overall startup sector, the report said that 2022 recorded the lowest number of new tech startups, at 652. The highest number of startups registered in India was 8,000 in the year 2015, taking the total number of startup launches from 2014 to 2022-end to 58,000.
Also read: Edtech start-ups funding down 50% in Q2 2022 from Q1, report says. Insiders blame ‘bad phase’
Most M&As in 2022
According to the report, 2022 saw the largest number of mergers & acquisitions (M&A), 240.
“The ongoing funding crunch, investor exit and need for market consolidation among bigger players elevated the number of M&A transactions in 2022,” the report said.
It added that one out of every five startups acquired in 2022 was from the e-commerce or enterprise tech sector.
Experts believe that the trend is likely to continue in the future. Making a prediction about the year 2023, experts told ThePrint that the coming year would be largely about consolidation and mergers and acquisitions.
The top-10 M&As in 2022 were — MX TakaTak & ShareChat ($600 million), Blinkit & Zomato ($568 million), Pickrr & Shiprocket ($200 million), Unbxd & Netcore ($100 million), Addverb Technologies & Reliance Retail ($132 million), Northwest Executive Education & Great Learning ($100 million), WealthDesk & PhonePe ($75 million), Owndays & Lenskart ($400 million), OpenQ & PhonePe ($75 million) and Clovia & Reliance Retail ($125 million).
Firing trend to continue
Listing the predictions for the future, the report said India will get more unicorns in 2023 than 2022.
“While investors have been cautious when it comes to large deals in 2022, some of this will change towards the latter half of next year. Startups from fintech, enterprisetech, B2B e-commerce that are on the verge of the unicorn club are more likely to hit the $1 billion valuation as these are the sectors that are seeing the least impact, and will continue to attract VC (venture capital) dollars in 2023,” it noted.
According to the report, smaller initial public offers (IPOs) will continue to thrive.
“The likes of Tracxn and DroneAcharya have shown that smaller profitable ventures that have the right fundamentals can see success with IPOs. Even though larger companies might delay their IPOs till 2024, a number of smaller tech IPOs can be expected in 2023 as investors look for value deals,” it said.
It added that mergers and acquisitions will increase in 2023 and consolidation will be seen in sectors like edtech, retail and hyperlocal tech, mobility, director-to-consumer (D2C), enterprisetech and fintech.
The trend of layoffs is also expected to continue in the coming year.
“The year 2022 has been a watershed moment for startups with more than 18,000 layoffs, but at the same time, companies have been hiring to fill resource gaps in growth areas. This trend of hiring and layoffs will continue as the companies adapt to meet sustainability targets,” the report highlighted, adding that candidates with diverse skill sets will be in demand.
(Edited by Nida Fatima Siddiqui)
Also read: Everyone loves an Indian start-up success story. Not too many know that 2,000 failed last year