India overtook China by including 23 unicorns in 2022 whereas the neighbouring nation created 11 such startups with valuation of $1 billion or extra, in response to a report launched on Wednesday.

For the second time in a row, India topped China creating 23 unicorns in 2022, taking the whole variety of such high-value corporations to 96, as in opposition to China’s 11 within the yr, mentioned a reporty by IVCA-Bain & Co.

However, this yr’s quantity is simply half of the unicorns created in 2021 when it stood at a file 44, which took the general quantity to 73 in that yr.

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According to the report, 9 of the 23 unicorns added within the yr have emerged from cities exterior of the highest 3 metros, indicating a shift to extra democratic funding geographically. This implies that funding to startups in non-metros grew to 18 per cent of the whole inflows share.

The yr additionally many buyers elevating their largest ever India-focused funds, the report mentioned, including the SaaS (Software as a Service)-based and fintech gamers maintained the deal worth whereas shopper tech declined.

The yr 2022 noticed a recaliberation in enterprise capital investments within the nation as growing macroeconomic uncertainty and recessionary fears affected funding momentum, mentioned the Bain & Company’s annual report in collaboration with the Indian Venture and Alternate Capital Association (IVCA).

The report mentioned the nation added 23 unicorns however the 33 per cent compression within the deal worth confronted by the home startup ecosystem, from $38.5 billion in 2021 to $25.7 billion in 2022.

Decline in funding was largely over the second half of the yr as macro headwinds intensified. Despite such a deep compression, early-stage corporations continued to see sustained momentum buoying deal quantity to over 1,600 enterprise capital investments in 2022.

According to Arpan Sheth, accomplice at Bain & Co, total funding noticed a drop in 2022, led by a decline in late-stage giant offers. The ecosystem has confronted foundational shifts as VCs pivoted their focus to unit economics and startups confronted a difficult yr with a number of regulatory challenges, layoffs and company governance points surfacing.

Despite the general softening, just a few areas continued to supply hope — SaaS funding remained consistent with 2021 highs and early-stage deal making noticed sustained momentum.

Going ahead, whereas macro headwinds will proceed to impression the funding, 2023 might result in the emergence of a extra resilient ecosystem within the nation, he added.

According to the IVCA president Rajat Tandon, through the years, the choice funding asset class has demonstrated outstanding resilience. While 2022 marked a yr that heralded PEs/VCs to adapt within the face of unprecedented challenges, it additionally went on to see file fund-raising and all-time excessive accessible dry powder. This solely reinforces international investor confidence within the nation as one of many few progress vivid spots.

“We remain optimistic about the long-term growth prospects of the industry and its ability to navigate uncertainties, identify opportunities,” he added.

The report additional famous that whereas the share of main funds got here down to twenty per cent from 25 per cent in 2021 following a slowdown in exercise from international crossovers and hedge funds, conventional PEs continued to indicate curiosity in choose progress fairness offers and took part in a number of $100 million-plus offers, deepening the pool of progress capital accessible. Micro VCs additionally grew in salience.

On their outlook for 2023, accomplice at Bain & Co Sriwatsan Krishnan expects 2023 seemingly seeing the emergence of a extra resilient ecosystem as stakeholders stay cautiously optimistic. Investors are anticipated to double down on early-stage deal making in emergent areas corresponding to gaming (hyper informal video games, e-sports), health-tech, EV and AI-led use-cases more likely to see curiosity.