Women-led startups' contribution in funding chunk rises in 2022: study

Women-led startups' contribution in funding chunk rises in 2022: study

With women-led entrepreneurship gaining increasing prominence in India, startups led by women founders managed to make up for a larger chunk of the overall funding in value terms last year versus 2021, a new report shows.

While funding raised by women-led startups remained at a similar level in terms of value, at about $3.9 billion during both years, these startups made up almost 11% of the total funds raised in 2022 against 8% in 2021, a new report by market intelligence platform Tracxn said.

Overall funding values declined nearly 34% year-on-year to $35.6 billion last year due to weakness in late-stage funding, according to the data platform.

Interestingly, of the 11 unicorns (startups valued $1 billion or more) with women leadership, five of them joined the club in 2022. These include 5ire, Lead School, Open, LivSpace, and Amagi.

Even as the decline in early-stage funding was less pronounced last year, women-led startups bucked the trend, as per the report, with early-stage funding into women-led startups nearly doubling from $550.5 million in 2021 to $1.1 billion in 2022.

In terms of their contribution in this stage of fundraising, women-led ventures secured 13.4% of capital raised by early-stage startups in India, up from 7.8% earlier.

Early-stage startups raised about $8.2 billion in funding in equity rounds in 2022 compared to $7.1 billion in the preceding year, Tracxn data showed.

Alongside this uptick in women-led startup funding, femtech sector, which comprises startups providing digital solutions for women’s and baby health, raised 38% higher in terms of funding value. The sector secured about $98.4 million in 2022, compared to $71.2 million in 2021, indicating a rising investor interest in women and child health-related ventures.

The report also points to a 91% rise in funding in the sector in the five-year period from 2017 to 2022.

This rise in funding is backed by a rising investor inclination in the startups with women at the helm. In December, report noted that Google aims to focus on investing in women-led early-stage startups through its ₹75,000 crore India Digitisation Fund, which it had launched in 2020, with an aim to make access to the internet affordable.

VCCircle also reported in October that Enzia, an all women-led venture capital fund, is in the final stages of raising Rs 200 crore for its Rs 300-crore fund, and may close the fundraise in early 2023.

Apart from rising corporate-led interest in these startups, the government also stepped-up initiatives to support women entrepreneurs. In November, the Karnataka government signed a memorandum of understanding (MoU) with Google to support emerging startups in the state. As part of the deal, Google will work with Karnataka Innovation and Technology Society (KITS) to provide women-led founders and startups in tier 2 and tier 3 cities in the state with access to partners and training in the cloud, user experience (UX), Android, Web, product strategy, leadership, and marketing.

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