KOCHI: Despite the funding winter, Kerala’s startup ecosystem stands out as the lone one in the country to report a notable uptick of 15% in 2023 even as all major ecosystems in the nation experienced a year-on-year decline.
According to market intelligence platform Tracxn’s Geo Annual Report, Kerala-based startups raised $33.2 million in 2023, marking a 15% increase from the $28.9 million raised in 2022.
Karnataka, the leading ecosystem, witnessed a funding decline of 72%, falling from $12.2 billion in 2022 to $3.4 billion in 2023. Likewise, Maharashtra saw a decline of 62% to $2.1 billion, and Delhi NCR witnessed a decline of 61% to $1.5 billion.
According to the report, Kerala’s tech startup ecosystem currently holds the 11th position among other startup landscapes in India, with an overall funding of $354 million to date.
The report highlights that seed-stage funding constituted 78% of the total funding raised during 2023. This sector attracted seed-stage investments worth $26.2 million, indicating a significant surge of 40% compared to the $18.7 million raised in the previous year.
Though the funding amount is low compared to other states, the region has seen consistent growth in funding since 2018, Neha Singh, co-founder at Tracxn, told TNIE.
“It is home to more than 4,000 tech startups, out of which more than 120 companies are funded. Kerala witnessed its highest funding in 2015 with a total funding of $175m. The Kerala startup ecosystem has been identified among the top five states in the 4th Edition of States Startup Ranking as the best performer under the Category A list by the Union government. With supportive government policies, we expect to see more growth in the region once the current macroeconomic condition stabilises,” she said.
However, the Traxn report points out that the Kerala startup ecosystem has not recorded any late-stage funding in the past five years. Early-stage funding fell 32% to $7 million in 2023 from $10.3 million in 2022.
In 2023, this space saw a total of 11 funding rounds, compared to the same period in 2022 which saw 29 funding rounds, marking a decline of 62%. The company I Hub Robotics has witnessed $20mm in seed funding, and thus becoming the highest funded company in this space in 2023.
The Kerala tech startup ecosystem witnessed six acquisitions in 2023, a slight improvement from two during the previous year. Waybeo, Acemoney and Xylem Learning were among the companies that were acquired in 2023.
Kerala Angel Network president Raveendranath Kamath said there has been a noticeable positive change, but the startup ecosystem in the state is still in its infancy. Deal sizes remain small, and it is nowhere near as vibrant as the larger ecosystems, he pointed out.
“The quality of startups is improving, and credit must be given to the Kerala Startup Mission for kickstarting and promoting the ecosystem,” Kamath said.
11th position
Kerala’s tech startup ecosystem currently holds the 11th position among other startup landscapes in India, with an overall funding of $354 million to date