According to data released on Tuesday by GlobalData, venture capital (VC) investments in Indian companies fell by more than 38% in 2022 as a result of market instability and economic uncertainty. A review of its financial deals database, according to a statement from GlobalData, shows that “a total of 1,726 VC funding deals worth $20.9 billion were announced in India in 2022 compared to 1,715 deals worth $33.8 billion in 2021”.
“The ongoing economic uncertainty and market volatility continue to affect the fundraising and investment activities in India and subsequently VC investment in the country startups suffered a massive year-on-year 38.2% decline in value terms during 2022,” the data and analytics company said.
Lead analyst at GlobalData, Aurojyoti Bose, stated that China and India are the two largest VC investment markets in terms of volume and value. India is a significant Asia-Pacific market.
It is also one of the top four markets in the world, along with the US, the UK, China, and India.
In 2022, India contributed 5.1% and 6.3%, respectively, of the total value and volume of VC financing.
India showed up as a remarkable exception and reported a 0.6% gain in VC financing transaction volume in 2022 compared to the previous year, while the US, the UK, and China all saw declines.
“Although India’s VC funding deal volume has slightly increased year-on-year, the significant drop in VC funding value seems to be a fallout of growing investor cautiousness over startup valuations. Moreover, volatile market conditions and recession fears seem to have forced many investors to preserve capital. The restrictions on travel and in-person meetings also made it more difficult for VC firms to conduct due diligence on potential investments,” Bose said.
VC capital agreements’ average size, which was $19.7 million in 2021, dropped to $12.1 million in 2022. In India, 42 VC transactions with a total value of at least $100 million were disclosed in 2022 compared to 86 the year before.
Due to a delay in the release of information into the public domain, GlobalData warned that historical data may alter in the event that any agreements are added to earlier months.
