BENGALURU: The funding winter in the Indian start-up ecosystem continues as the last quarter of this year (till December 8) is the lowest-funded quarter since Q3 2016, as start-ups could raise only $957 million. In Q3, 2023, start-ups managed to raise a total funding of $1.5 billion. Data from Tracxn’s India Tech 2023 report reveals that not just the fourth quarter, but throughout 2023, the start-up ecosystem witnessed funding slowdown as the year became the lowest-funded year in the last five years with just $7 billion received so far. In 2022, India Tech received a total funding of $25 billion.
While the challenging macro environment and increasing interest rates played a major role in less funding, late-stage start-ups were the worst hit as they continue to struggle to raise funds. Late-stage funding dropped by over 73% to $4.2 billion this year from $15.6 billion in 2022. Even early-stage funding dropped by 70% to $2.2 billion compared to $7.3 billion last year.
In the fintech sector, PhonePe is the top funded company as it received funding of $750 million in four Series D rounds. With a total of $1.9 billion in funding, the retail sector also witnessed a 67% drop in funding compared to the last year. Interestingly, environment tech and spacetech sectors are gaining prominence as they have been receiving good investor attention in 2023. The spacetech sector received a funding of $122 million in 2023 till date, a 6% increase from $115 million received in 2022.
Incred and Zepto are the only two companies that entered the unicorn club in 2023 compared to 23 in 2022. Neha Singh, Co-Founder, Tracxn said, “While the funding slowdown in 2023 presents challenges for the Indian tech start-up ecosystem, we remain optimistic about the future. Our focus remains on innovation and creating value, and we are confident the industry will rebound and flourish.” Experts said apart from spacetech, GenAI (Generative Artificial Intelligence) is one area where venture capitalists are coming forward to invest.
Start-ups see funding slowdown this year at $7 billion
Tracxn India Tech 2023 report reveals not only Q4, throughout 2023, the start-up ecosystem saw funding slowdown, with the lowest funding in the last five years. Just $7 billion received so far this year