Tracxn Technologies Ltd., a leading global market intelligence platform, released its ‘Tracxn Geo Annual Report: India Tech 2023,’ which reveals a notable 73% decline in funding for the Indian tech startup ecosystem in 2023, compared to USD 25 billion in 2022, making it the lowest-funded year in the last 5 years.
- India, with total funding of USD 7 billion (till 5 December 2023), has slipped from 4th place (in 2022 and 2021) to 5th place among the highest-funded geographies globally in the 3rd Quarter (Q3) of 2023.
- The top 4 highest-funded countries are the United States of America (USA), the United Kingdom (UK), China, and France respectively.
Note: The last quarter (Q4) 2023 marked the lowest funding quarter since Q3 2016, recording a mere USD 957 million in investments.
About the Report:
The report is Tracxn’s annual exclusive report research deep into the dynamics of the Indian startup ecosystem, providing invaluable insights into funding activities, investor exits through acquisitions and Initial Public Offerings (IPOs), and broader developments in the fundraising landscape.
Report Analysis:
i.For 2023, the funding declined across all stages, with late-stage funding dropping over 73%, followed by early-stage funding (70%) and seed-stage funding (60%).
ii.The decline is primarily due to the biggest drop in late-stage funding, by over 73% to USD 4.2 billion in 2023 from USD 15.6 billion in 2022.
FinTech Sector:
FinTech secured USD 2.1 billion in 2023, a significant decrease from 2022’s USD 5.8 billion.
- PhonePe, became the top-funded company in the sector, with USD 750 million, constituting 38% of the sector’s funding.
- Perfios, Insurancedekho, and Kreditbee are some of the other top-funded companies in the sector in 2023
Retail Sector:
The retail sector faced a 67% funding drop in 2023 compared to 2022, amounting to USD 1.9 billion.
- Lenskart emerged as the top-funded company with USD 600 million raised in two Series J rounds.
Enterprise Applications, the 3rd-highest funded sector in 2023, has experienced a significant decrease of 78% compared to 2022, securing USD 1.56 billion in funding.
Environment Tech received USD 1.2 billion in funding.
SpaceTech, privatised by the government, witnessed a 6% increase, raising USD 122 million so far in 2023.
Regional Dynamics:
Bengaluru(Karnataka), Mumbai(Maharashtra), and Delhi-National Capital Region(NCR) continued to be hotspots for funding in India’s tech startup ecosystem.
- Leading investors such as LetsVenture, Accel, and Blume Ventures played pivotal roles in supporting the growth of the Indian tech space.
Key Highlights:
i.Only 2 new unicorns (startups valued at over USD 1 billion)Â emerged in the 2023 report namely, Incred and Zepto, which is a notable decline from 23 Unicorns in 2022.
ii.Acquisitions saw a 36% drop, totaling 119 compared to 187 in 2022. Major acquisitions included Route Mobile, Arcion, and Gram Power.
iii.Despite the slowdown, IPO numbers remained relatively stable, with 18 tech companies going public in 2023, compared to 19 in 2022.
- Notable tech IPOs of 2023 include Ideaforge, Yatra, and IKIO Lighting.
iv.This decline in funding comes at a time when India’s economy is expected to grow at a 6.3% annual rate in 2023–24, with further growth anticipated in the upcoming fiscal year.
Recent related News:
Kerala Startup Mission (KSUM), and Business Finland signed a Memorandum of Understanding (MoU) to boost the startup ecosystems in India and Finland.
About Tracxn Technologies Ltd:
Managing Director and Chairperson– Ms. Neha Singh
Headquarters– Bengaluru, Karnataka
