The startup world’s lustre started to fade in 2022 as macroeconomic issues reduced consumer spending. It was also the time that a few fresh competitor cities entered the startup hub rankings; these cities are anticipated to increase their market share going forward.

While Bangalore, Delhi, and Mumbai continued to lead the pack in absolute terms in 2022, these locations saw a decrease in the total amount of investment raised by startups year over year. In terms of deal value, Chennai, Hyderabad, and Pune were the top gainers.

Chennai and Hyderabad were the two cities that had the most gains, according to data gathered by TOI from the research firm Venture Intelligence (see graphic). Experts told TOI that this is probably due to investors being choosy with their dry powder deployment to more economically sound startups and B2B and enterprise tech emerging as top options in a challenging funding climate. Investors observed that because to successful bets on founders from Jaipur, Surat, and other places, their portfolio is more diverse now.

and other non-metros, like Coimbatore. The DNA of these founders is primarily focused on establishing an effective, lucrative business, and they are, by nature, frugal, according to investors who said there is a drive among entrepreneurs from these cities.

According to venture capital (VC) firm Inflection Point Ventures (IPV), which recorded the most early-stage agreements in 2022, technology has made it easier for Americans to contact entrepreneurs and ideas. Vinay Bansal, founder and CEO of IPV, stated that the year 2022 “showed us, as investors, we need to get out of the FOMO mentality-ideas and fiscal discipline are more essential than where founders originate from.”

According to managing partner of Arali Ventures Arun Raghavan, as the market matures, support ecosystems for companies develop outside of the typical hubs. He continued, “Access to entry-level talent is also better and more affordable in smaller locations.

Data from research firm Tracxn also revealed that in 2022, unicorn activity was brisk in Pune, Chennai, and Hyderabad and that these cities have increased financing shares. According to Tracxn co-founder Neha Singh, three firms from Pune, two from Chennai, and one from Hyderabad became unicorns this year.

According to Ideaspring Capital managing partner Naganand Doraswamy, 2021 was possibly an outlier and a “year of unreasonable enthusiasm,” making 2022 by contrast a fundraising winter. The major lessons from 2022, he said, will be to ensure profitability, be thrifty, and achieve unit economics. These lessons will be applied for the next two to three years.

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