Monthly VC deals are down 20% this year, with exits halving as the bullish mood fades

16 Jun 2022 , 09:32 AM

According to a report by the Indian Venture and Alternate Capital Association (IVCA) and Bain & Company, the average number of venture capital (VC) deals has decreased by a fifth, or 20%, to 130 per month so far in 2022, as the much-discussed funding winter has gripped India’s startup environment.

The average VC check size has also decreased this year, from $25 million in 2021 to $20 million so far. Exits have also dropped 56% in the last year to $5.9 billion for a similar time period, according to the research, and exit activity is projected to continue to decline. Exits had increased by 300%, or fourfold, to $36 billion in 2021, according to the IVCA-Bain & Company research. According to a report by the Indian Venture and Alternate Capital Association (IVCA) and Bain & Company, the average number of venture capital (VC) deals has decreased by a fifth, or 20%, to 130 per month so far in 2022, as the much-discussed funding winter has gripped India’s startup environment.

The average VC check size has also decreased this year, from $25 million in 2021 to $20 million so far. Exits have also dropped 56% in the last year to $5.9 billion for a similar time period, according to the research, and exit activity is projected to continue to decline. Exits had increased by 300 percent, or fourfold, to $36 billion in 2021, according to the IVCA-Bain & Company research.

The global economy entered 2022 dealing with macro stressors such as out-of-control inflation, global political uncertainty, growing tensions, supply chain disruptions, and calls for immediate climate action.

The public market meltdown in blue-chip tech companies has further weakened the market’s mood, eroding the confidence around tech and internet enterprises, which were valued at extraordinarily high levels in the fourth quarter of 2021.

According to the study, Indian funds are bracing for a fall following last year’s lofty valuations and a hectic activity in terms of deals and exits.
However, according to the IVCA-Bain & Company study, private equity (PE) money continued to flow into India’s businesses, with monthly deal counts increasing by roughly 27% on an annualized basis of 165 agreements.

According to the research, the average realized cheque size of $168 million this year keeps PE agreements within the $150—$200 million range recorded over the prior five years. It boosted overall PE-VC activity, with Indian companies raising more than $24 billion in 630 deals so far in 2022, compared to $19 billion in 775 deals in the first five months of 2022.