Venture Capital (VC) investments in Indian startups experienced a significant drop in 2022, according to a report by GlobalData.
The report cites economic uncertainty and market volatility as major factors affecting fundraising and investment activities in the country.
Analysis of the company's financial deals database shows that there were 1,726 VC funding deals worth $20.9 billion announced in India in 2022, compared to 1,715 deals worth $33.8 billion in 2021, a 38.2% decline in value.
India is a key player in the Asia-Pacific market for VC funding, and is among the top four markets globally alongside the US, the UK and China. In 2022, India accounted for 5.1% and 6.3% of global VC funding value and volume, respectively.
The US, the UK, and China all registered a decline in VC funding deal volume in 2022, while India registered a 0.6% growth, however, that is not enough to compensate for the drop in value terms.
The average size of VC funding deals in India fell from $19.7 million in 2021 to $12.1 million in 2022. The number of VC deals valued at or above $100 million also decreased from 86 in 2021 to 42 in 2022.
The report suggests that the decrease in VC investment can be attributed to growing investor cautiousness over startup valuations, volatile market conditions, and recession fears. Additionally, travel restrictions and difficulty in conducting due diligence on potential investments have also had an impact.