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The Indian startup ecosystem reported the lowest six-month funding in the last four years, in the first half of this year at $3.8 billion across 298 deals -- a decline of nearly 36 per cent as compared to the second half of 2022 ($5.9 billion), a report showed on Sunday.

Fintech, Software-as-a-Service (SaaS) and direct-2-consumer (D2C) continued to be the most funded sectors, according to the PwC India report.

Growth and late-stage funding deals accounted for 84 per cent of the funding activity in the January-June period. These represented 43 per cent of the total count of deals in this period.

The average ticket size in growth-stage deals was $19 million and late-stage deals was $52 million, said the report.

“There is a slowdown in startup funding despite significant untapped capital reserves held by venture capitalists (VCs). Active VC firms in India have secured new funds in the past year and we can expect the pace of investments to pick up in the next few months,” said Amit Nawka, Partner, Deals & India Startups Leader, PwC India.

In the interim, there has been an increase in the due diligence being carried out by investors before making investments, both in terms of detailing as well as coverage, he added.

Early-stage deals accounted for 57 per cent of the total funding in H1 CY23 (in volume terms). In value terms, early-stage deals contributed to approximately 16 per cent of the total funding but was at its lowest as compared to the previous two years.

Bengaluru, Delhi-NCR, and Mumbai continue to be the key start-up cities, representing around 83 per cent of the total startup funding activity.