“While the funding slowdown in 2023 presents challenges for the Indian tech startup ecosystem, we remain optimistic about the future," Neha Singh, co-founder of Tracxn, says in the private markets intelligence provider’s latest report on the funding scene in India’s startup ecosystem. In a year when large global names that drove the funding frenzy of previous years were absent, favourable government policies and a fast-growing local economy will help India’s startups succeed, Singh says.
Here are the top takeaways from Tracxn’s recent report on funding in India’s tech startup landscape in 2023:
The October-to-December three-month period has received a total funding of $957 million, making it the lowest funded quarter since September 2016. The decline is primarily due to the biggest drop in late-stage funding, by over 73 percent to $4.2 billion in 2023 from $15.6 billion in 2022. At 17, the number of $100 million-plus rounds this year, is 69 percent lower than in 2022.
India fell one position to end 2023 as the fifth-most funded geography globally, from rank four in 2022 and 2021.
LetsVenture, Accel and Blume Ventures were the top investors in Indian tech and tech-enabled startups. 100X.VC, Venture Catalysts and Y Combinator were the lead investors at the seed stage. Accel, Peak XV Partners and Elevation were the most active investors in the early stage. Singularity Ventures, Avataar Ventures and Filter Capital were the leading investors actively involved in late stage, according to Tracxn.
Bengaluru, Mumbai and Delhi-NCR were where the top-funded startups were based.
Retail sector startups received a total of $1.9 billion, a 67 percent drop versus 2022. Lenskart was the top-funded company in the sector in 2023, receiving $600 million in two Series J rounds. Zetwerk, Atomberg and XpressBees were some of the other top-funded companies in the sector this year.
Enterprise applications was the third-highest funded sector in 2023, receiving $1.56 billion in funding in 2023, down by 78 percent from $7 billion in 2022. Environment tech and space tech were among the sectors that attracted investor interest in 2023, with funding of $1.2 billion and $122 million respectively in 2023. That was a 50 percent drop for environment tech versus 2022, but a 225 percent increase versus 2021, according to Tracxn.
IPO numbers didn’t really see a drop this year, with 18 tech companies going public versus 19 in 2022. IdeaForge, Yatra and IKIO Lighting were some of the notable tech IPOs in 2023.
There were 119 acquisitions in 2023 versus 187 in 2022, a 36 percent drop. Route Mobile, Arcion and Gram Power were among notable acquisitions in 2023.
The government of India’s programmes to support tech startups in the country since the Startup India initiative was announced in 2016 has helped the ecosystem. Today there are steps being taken to help startups and industries in multiple areas, from drones to semiconductors to space exploration.
The IMF projects India to become the third-largest economy in the world by 2027, with a GDP of over $5 trillion. With a large consumer base comprising the world’s largest young population and rising urban incomes, India is set to see good growth in the coming years.
First Published: Dec 19, 2023, 14:27
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