Funding for Indian startups hit its lowest point in the third quarter of 2023, marking the lowest level in the last five years, according to a report by Tracxn.
The third quarter of 2023 saw a total of approximately $1.5 billion in fund inflows, reflecting a significant 30% decline from the previous quarter and a substantial 54% drop from the same period in the previous year.
Tracxn’s report highlights that only two new unicorns, Zepto and Zyber 365, emerged during the third quarter, underscoring the challenges faced by the Indian startup ecosystem.
The report further identifies key startups that secured significant funding rounds in the July-September quarter of 2023. Companies such as Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365 raised funding rounds exceeding $100 million. Perfios led the way with a series D round that raised $229 million.
The fintech sector experienced notable growth, witnessing a 68% increase compared to the previous quarter. This growth was attributed to the wider and rapid adoption of the Unified Payments Interface (UPI) both domestically and in international markets.
Neha Singh, co-founder of Tracxn, commented on the findings, stating, “Despite facing the challenges of a funding winter, India ranks as the fifth-highest funded country in Q3 2023 and maintains its fourth-place position in terms of total funding for the year to date. It underscores the resilience of India’s tech startups and their ability to adapt to changing market conditions.”
This decrease in startup funding during July-September 2023 represents the third consecutive quarter of declining funding, following a rise in startup funding in the fourth quarter of 2022.
Breaking down the funding in Q3 2023, the report indicates that late-stage rounds accounted for approximately $1 billion, early-stage rounds received $416 million, and seed-stage rounds secured $84.3 million.
Bengaluru led in terms of total funding raised, followed by Mumbai and Noida, highlighting the continued importance of these tech hubs in India’s startup landscape.
Abhishek Goyal, co-founder of Tracxn, noted a promising sign in the report, stating, “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 an impressive 91% increase from $376 million in August 2023 to $720 million in September 2023.”
