Indian Startup Funding Declines By 24% In H1 2023: Tracxn Despite these challenges, the first half of 2023 witnessed 14 funding rounds surpassing $100 million, marking a 17% increase from H2 2022
By Teena Jose
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SaaS-based market intelligence platform, Tracxn, has unveiled its latest report, the 'Tracxn Geo Semi Annual Report: India Tech-H1 2023', which provides comprehensive insights into the Indian startup ecosystem, covering funding raised by startups, investors' exits through acquisitions and IPOs, and key trends shaping the fundraising landscape. The report stated that the Indian startup ecosystem faced a challenging first half of 2023 as funding experienced a significant decline.
According to the report, total funding in H1 2023 ($5.5B) declined by 24% compared to H2 2022 ($7.3B), and a staggering 72% drop compared to H1 2022 ($19.7 billion). Also, the number of funding rounds also experienced a substantial decrease in H1 2023 (536), with a drop of 43% compared to H2 2022 (946) and 66% compared to H1 2022 (1586).
"According to our latest semi-annual India Tech report, despite India being one of the top-performing countries across the globe with respect to funding in the private sector, it is currently facing a deceleration in funding due to inflation and other macroeconomic factors. Nevertheless, India still continues to be one of the fastest-growing major economies. India's startup ecosystem ranked third in terms of funding in 2022, and it moved up to second in Q1 2023, and there is a tremendous amount of growth potential," said Neha Singh, co-founder, Tracxn.
Specifying the funding statistics of funding rounds, the data revealed that, late-stage rounds in H1 2023 witnessed a decline of 71%, amounting to $3.8 billion, compared to H1 2022. Early-stage rounds secured $1.4 billion, reflecting a 44% decline from H2 2022 and a significant 73% drop from H1 2022. Seed-stage rounds faced a similar fate, with a 41% drop from H2 2022 and a 71% fall from H1 2022, securing only $315 million in funding.
It also said that H1 2023, saw no new unicorns, marking a significant decline from the 19 new Unicorns in H1 2022 and six in H2 2022. In terms of acquisitions also, there was a notable decline. It added, with 74 acquisitions in H1 2023, a marginal 4% decrease compared to H2 2022 and a 52% fall from H1 2022.
"The investment environment has seen a plunge in funding, but there is a revolution in tier 2 and tier 3 cities with an increased rate in the number of startups being formed, which is fuelling the country's economic growth. The lack of unicorns in the first half of the year is a dampener, but the addition of 60 companies to the soonicorn club and the funding of 212 companies for the first time is a silver lining amidst the global headwinds," said Abhishek Goyal, co-founder, Tracxn.
Despite these challenges, the first half of 2023 witnessed 14 funding rounds surpassing $100 million, marking a 17% increase from H2 2022. In H1 2023, the top-performing sectors were environment tech, fintech and retail, stated the report.
Bangalore emerged as the leader in total funds raised during this period, followed by Delhi NCR and Mumbai, whereas the top investors in H1 2023 were 100X.VC, IPV, and Accel, as per the report.
