Indian Startups Funding Dropped By 72% In 2023
The Indian Tech Startup ecosystem witnessed a funding winter in 2023, with funding dropping 72 percent compared to the previous year. With this, India”s ranking among the highest-funded geographies globally in 2023 declined from 4th to 5th place. In 2023 until December 5, Indian startups received $7 billion in total funding compared to $25 billion in the previous year, according to a report by leading global market intelligence platform Tracxn.
The number of unicorns created this year was restricted to two: Incred and Zepto. Whereas in the previous year, there were 23 unicorns created. Total acquisitions also dropped from 187 to 119. All stages of funding saw a significant decrease, with late-stage funding decreasing by over 73 percent following early-stage funding (70 percent) and seed-stage funding (60 percent).
“While the funding slowdown in 2023 presents challenges for the Indian tech startup ecosystem, we remain optimistic about the future. With favorable government policies and a fast-growing economy, we believe India is well-positioned for success in the years to come,” said Neha Singh, co-founder, Tracxn.
The last quarter (Q4) fiscal has been the worst, with $957 million to date, to become the lowest-funded quarter since Q3 2016. Experts attribute the total funding crunch to late-stage funding, which dropped by over 73 percent to $4.2 billion in 2023 from $15.6 billion in 2022.
The number of $100 million+ rounds recorded was only 17, dipping by 69 percent compared to last year. FinTech was able to receive $2.1 billion in funding so far in 2023, compared to $5.8 billion from the same period last year, despite increased smartphone penetration and government initiatives towards a cashless economy.
PhonePe remained the top-funded startup in the FinTech sector, garnering a total of $750 million in four Series D rounds, which makes up 38 percent of the funding received by the sector. Perfios, Insurancedekho, and Kreditbee followed Phonepe in terms of top-funded startups.
The retail sector saw a 67 percent drop after receiving only $1.9 billion, with Lenskart receiving $600 million in two Series J rounds, which is the biggest amount attracted by a company in the retail sector.
However, Environment Tech and Space Tech witnessed increased interest by investment companies, receiving $1.2 billion and $122 million, respectively. Bengaluru, Mumbai, and Delhi-NCR resumed to be the most appealing funding destinations with a tech startup ecosystem. LetsVenture, Accel, and Blume Ventures became the top investors.
