Why Entrepreneurs Shouldn't Be Deterred by Funding Winter

The Indian startup ecosystem has come a long way over the last decade, peaking with $41 billion invested in 2021 as per Tracxn. India is now ranked the third-largest startup ecosystem globally, with nearly 80,000 startups. The rise of Internet penetration, growing digitization, availability of cheap capital, and supportive policies by the government have all contributed to supercharge entrepreneurship and investment in the country.

- ANKUR SHRIVASTAVA

However, since early 2022, a funding winter has set in globally due to several macroeconomic and geopolitical issues, including the Russia-Ukraine war, post-pandemic cooling of digital economy, high inflation rates, and resultant interest rate hikes across geographies. And as recently as a few weeks ago, the demise of SVB has brought further macroeconomic uncertainty.

These have impacted the Indian startup ecosystem heavily, and investment dropped by over a third in 2022, to about $26 billion as per Tracxn. Late-stage investors have especially pulled back with nearly a 45% drop, with large funds like Tiger and Softbank putting a freeze on India investments. Thousands of employees in tech companies have lost their jobs amidst massive layoffs recently. And the winter isn't abating yet, with a recovery expected only after the end of this year.