After a record-breaking 2021, which was all about the unicorns, it will not be an understatement to say “the hype tide” receded in 2022. With fewer unicorns, fewer $100 million rounds, fewer “leapfrogging” valuation stories, this year has mostly been about the funding winter and the slippery ice upon which the growth and late stage startups are skating.
But, if there’s anyone who has stayed warm, kept the fire burning in the hearth, it’s the early-stage startups. And as a result, when we look at the trajectory of investments in 2022, it is clear that there is only one star investor this year — the early-stage investor.
Seed-stage startups have raised a historic $1 billion in funding. And, Series A funding has surged to $4.2 billion in 2022. That’s 50 percent more than what was raised even in the record-setting year of 2021, according to data from Venture Intelligence.
What’s more, the average deal size for these early rounds has gone up — offering comfort when tightening of the belts is the call for what could be an 18-month-long, difficult fundraising period. Lower burn, sharper focus and leaner operations have turned early-stage startups into investor darlings. Unicorn builder Tiger Global, for instance, made its first early-stage bet in India this year.
At least 145 micro venture capital (VC) firms have been set up in India over the past two years. And, as VCs rushed to refill their coffers in 2022, there is at least $15-20 billion of dry-powder, most of it dedicated to early-to-growth stage startups.
There is a rush of new funds with special focus areas like climate-tech, agri-tech, clean-tech, health-tech and more.
CNBC-TV18 spoke to Dev Khare, Partner at Lightspeed India Partners; Vaibhav Domkundwar, Founder & CEO of Better Capital; and Hero Choudhary, Managing Partner at BEENEXT, to discuss the road ahead for early-stage investors and startups.
Watch video for entire discussion.
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