India's tech startup funding in 2023 hit a five-year low, slipping from 4th to 5th place globally, a Tracxn report revealed. Total funding plummeted to $7 billion by December 5, a staggering 72% decline from the previous year's $25 billion. Only two new unicorns emerged (Incred and Zepto), a sharp contrast from the 23 in the previous year. Similarly, acquisitions dropped to 119 from 187 in 2022.
Funding reductions spanned all stages: late-stage saw a 73% dip, followed by early-stage (70%) and seed-stage (60%). Neha Singh, Tracxn co-founder, expressed optimism, citing favorable government policies and India's robust economy for future success.
India slid from 4th to 5th place in global funding. Q4 hit a six-year low of $957 million. The major decline stemmed from a 73% drop in late-stage funding, totaling $4.2 billion in 2023. $100 million+ rounds decreased by 69%.
Despite the slowdown, FinTech received $2.1 billion, with PhonePe securing $750 million. Retail funding plummeted 67%, with Lenskart leading at $600 million. Environment Tech got $1.2 billion, while SpaceTech increased 6% to $122 million, driven by government privatization.
Bengaluru, Mumbai, and Delhi-NCR remained startup hubs, with LetsVenture, Accel, and Blume Ventures as prominent investors in India's tech growth.
Key Points:
1. India's tech startup ecosystem witnessed its lowest funding in five years, causing the country's global ranking to slip from 4th to 5th place in 2023, receiving only $7 billion in funding compared to $25 billion the previous year.
2. The creation of only two new unicorns, Incred and Zepto, in contrast to 23 in the previous year, along with a substantial drop in acquisitions from 187 to 119, highlighted the slowdown in India's tech landscape, as per a report by Tracxn.
3. Funding across all stages experienced significant declines: late-stage funding dropped by over 73%, early-stage by 70%, and seed-stage by 60% in 2023.
4. Despite these challenges, Neha Singh, co-founder of Tracxn, expressed optimism about India's tech future, citing favorable government policies and a rapidly growing economy as positive indicators for future success.
5. India's ranking among the highest-funded global tech geographies slipped from 4th in previous years to 5th in 2023 due to the funding slowdown, with Q4 registering the lowest funding since Q3 2016 at $957 million.
6. The decline was largely driven by a substantial drop in late-stage funding, plummeting from $15.6 billion in 2022 to $4.2 billion in 2023, accompanied by a decrease in $100 million+ funding rounds by 69%.
7. FinTech, despite a decrease in funding from $5.8 billion to $2.1 billion, remains significant, driven by increased smartphone adoption and governmental initiatives for a cashless economy. Notably, PhonePe secured $750 million, constituting 38% of the sector's funding.
8. Retail sector funding experienced a 67% decline, totaling $1.9 billion in 2023. Lenskart emerged as the top-funded company with $600 million in two Series J rounds.
9. Despite the overall funding slowdown, Environment Tech received $1.2 billion, showcasing continued investor interest, while SpaceTech observed a 6% increase with $122 million, spurred by government privatization efforts.
10. Bengaluru, Mumbai, and Delhi-NCR maintained their allure for tech startup funding, supported by key investors like LetsVenture, Accel, and Blume Ventures, indicating sustained growth potential in India's tech space.
(With Agency Inputs)
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