Tech start-up funding plunges by 72% to 5-year low
India's tech start-up scene has hit a five-year low in funding, with a whopping 72% drop in 2023 compared to the $25 billion raised in 2022. A report by global market intelligence platform Tracxn reveals that funding totaled just $7 billion by December 5, 2023, causing India's global ranking to slip from fourth to fifth place.
Late-stage funding sees the largest drop
The main culprit behind this funding slump is a massive 73% decrease in late-stage funding, which fell to $4.2 billion in 2023 from $15.6 billion the previous year. In fact, there were only 17 rounds of $100 million+ funding this year, a 69% drop compared to 2022. Early-stage and seed-stage funding also took a hit, with reductions of 70% and 60%, respectively.
Fewer unicorns and acquisitions in 2023
Only two new unicorns, Incred and Zepto, emerged in 2023. This is a far cry from the 23 unicorns created in 2022. Additionally, acquisitions dipped by 36%, with only 119 deals compared to 187 the previous year. Neha Singh, co-founder of Tracxn, remains hopeful for India's technology start-up ecosystem, citing favorable government policies and a rapidly growing economy.
Fintech and retail sectors face funding decline
Fintech and retail sectors also faced funding declines in 2023. Fintech received $2.1 billion, down from $5.8 billion in 2022, with PhonePe securing the highest funding of $750 million from four Series D rounds. The retail sector experienced a 67% drop in funding, raking in $1.9 billion, with Lenskart raising $600 million in two Series J rounds as the top-funded company.
Environment Tech and SpaceTech gain investor attention
On a positive note, the Environment Technology and Space Technology sectors have piqued investor interest. Environment Technology secured $1.2 billion in funding, while Space Technology saw a 6% increase with $122 million raised in 2023. Bengaluru, Mumbai, and Delhi-NCR continue to attract big funding, with LetsVenture, Accel, and Blume Ventures leading the charge in supporting India's technology start-up space.
