BENGALURU: Karnataka, which is home to more than 18,000 startups, has been witnessing a significant decline in funding.
In 2023, tech startups in the state received only $3.4 billion funding, which is a 72% plunge from $12.2 billion it raised in 2022, and an 83% decline from $20.4 billion raised in 2021, reveals data from market intelligence firm Tracxn.
It received $2.3 billion late-stage funding in 2023, which again is a decline of 73% compared to $8.9 billion received in 2022 and 87% drop compared to $17.3 billion received in 2021. For many quarters now, startups across the country are struggling to raise funds due to macroeconomic headwinds and geopolitical issues.
“Karnataka’s significant drop in startup funding, particularly in Bengaluru, can be attributed to increased investor caution and concerns about valuations,” said Somdutta Singh, Serial Entrepreneur, Founder and CEO Assiduus Global Inc, LP Angel Investor.
“The global economy faces challenges stemming from Russia-Ukraine and Israel-Hamas conflicts, which have disrupted the global supply chain and trade prospects. Further, monetary policy tightening has dampened aggregate demand, leading to a downturn in FDI,” he said.
35 acquisitions in tech sector
Also, no new unicorns emerged from this space in 2023, compared to seven unicorns in 2022 and 18 in 2021.
In 2023, the Karnataka tech sector saw 35 acquisitions, lower than 48 acquisitions made in 2022 and 57 in 2021. The startups based in Bengaluru raised $3.4 billion in 2023, while those in Hubli raised $121K. In the last one year, top funding rounds in the state include those raised by start-ups such as PhonePe, Udaan, Ola Electric, Dunzo and Ather Energy.