Start-up funding hits five-year low in Q3

Zepto tops the list of the country’s top 20 start-ups, according to the 2023 LinkedIn Top 20 Indian Startups List, Zepto was placed fourth in 2022.

Image used for representational purpose.

BENGALURU:  Funding into Indian start-ups continues to drop every quarter and the third quarter (Q3) of 2023 saw a 54% decline in funding at $1.5 billion as compared to Q3, 2022. Also, the third quarter is the least funded one in the last five years. Market intelligence firm Tracxn’s Geo Quarterly Report India Tech-Q3, 2023, revealed that late-stage funding rounds saw a 33% reduction and early-stage rounds plummeted by 74% compared to the year-ago period.

The third quarter witnessed five funding rounds exceeding USD 100 million, including companies such as Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365, with Perfios leading the way with a Series D round of USD 229 million. “Despite the decline in funding, India remains among the top-performing tech ecosystems globally. A promising sign in the report is the month-on-month funding growth, with a 91% rise from USD 376 million in August 2023 to USD 720 million in September 2023,” said Abhishek Goyal, co-founder, of Tracxn.

India added two new unicorns, Zepto and Zyber 365,  in Q3. However, this is a 50% fall compared to the previous year. There were 33 acquisitions during the quarter, a 13% decrease from Q3, 2022. The report highlights that enterprise applications, fintech, and transportation and logistics tech were the top-performing sectors in Q3, 2023.

Neha Singh, co-founder of Tracxn, said, “Despite facing the challenges of a funding winter, India ranks as the fifth highest funded country in Q3 of 2023 and maintains its fourth place position in terms of total funding for the year to date (YTD). It underscores the resilience of India’s tech start-ups and their ability to adapt to changing market conditions.”

Meanwhile, Zepto tops the list of the country’s top 20 start-ups, according to the 2023 LinkedIn Top 20 Indian Startups List. Zepto was placed fourth in 2022.  BluSmart, an electric ride-sharing company, which has made it in the list for three years in a row, emerged second on the list this year. Another EV start-up Exponent Energy was a new entrant on the list. Fintech continues to dominate India’s Top Startups list in 2023, with four start-ups making it to this year’s list - Ditto Insurance, Fi, Jar, and StockGro.

Third quarter funding

• 2 unicorns, Zepto and Zyber 365 were added in Q3
• The fintech sector witnessed 68% growth in Q3 due to the wider adoption of UPI

Late-stage rounds witnessed a 33% reduction

• Early-stage and seed-stage funding plummeted by 74% and 75%, respectively,  as compared to the third quarter of 2022
• Bengaluru emerged as the leader in total funds raised during Q3, 2023, followed by Mumbai and Noida
• Top investors in Q3, 2023, included Accel, Blume, and Peak XV Partners