The funding winter might be persistent, but Indian startups and investors aren’t giving up.
According to the Geo Quarterly Report India Tech- Q3 2023 by market intelligence platform Tracxn, India continues to hold its ground as a prominent player in the global tech funding landscape. Following an increase in funding in Q4 2022, the India tech space is seeing a decline in funding every quarter, with a third consecutive drop in funding in Q3 2023 making it the least funded quarter in 2023 and also the least funded quarter in the last five years.
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 dateNeha Singh, Co-Founder, Tracxn
Neha Singh, Co-Founder, Tracxn said, “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 (YTD). It underscores the resilience of India’s tech startups and their ability to adapt to changing market conditions.”
Q3 2023 saw a significant drop in funding, with a total of $1.5 billion raised, marking a 29% decrease from the previous quarter and a staggering 54% decline compared to Q3 2022. Late-stage rounds witnessed a 33% reduction, while early-stage and seed-stage funding plummeted by 74% and 75% compared to the same quarter the previous year (Q3 2022), respectively. Q3 2023 witnessed five funding rounds exceeding $100 million, including companies such as Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365, with Perfios leading the way with a Series D round of $229 million.
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 2023Abhishek Goyal, Co-Founder, Tracxn
“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.”, said Abhishek Goyal, Co-Founder, Tracxn.
The report highlights that enterprise applications, FinTech, and transportation and logistics tech were the top-performing sectors in Q3 2023. Enterprise Applications funding rose by 51% compared to the previous quarter, Fintech received $436 million in funding, marking a 68% growth, and Transportation and Logistics Tech garnered $375 million, showing a drop of 72%. The investment growth in the FinTech sector is propelled due to the rapid growth seen in the adoption of UPI both in the domestic market and international markets like Bhutan, France, UAE, Saudi Arabia, Bahrain, and Singapore. Over 10B monthly UPI transactions were reported in August this year as per reports from NPCI and digital payments.
Q3 2023 saw the creation of two unicorns, Zepto and Zyber 365, representing a 50% decline compared to the previous year. Additionally, there were 33 acquisitions during the quarter, a 13% decrease from Q3 2022. Notable acquisitions included Route Mobile’s acquisition by Proximus Group for $718 million and Marico Limited’s acquisition of Plix for $45.1 million. Four companies, namely Drone Destination, Aha Solar, IdeaForge, and Veefin went public in Q3 2023, showcasing the growing maturity of the Indian tech ecosystem.
Bengaluru emerged as the leader in total funds raised during Q3 2023, followed closely by Mumbai and Noida, reaffirming the significance of these tech hubs in India’s startup landscape.
Top investors in Q3 2023 included Accel, Blume, and Peak XV Partners. IPV, 100X.VC and Titan Capital led the seed investments, while Elevation, Tiger Global Management, and Accel were prominent in early-stage investments. In the late-stage category, Glade Brook Capital took the lead.