India tech startups see lowest funding in five years: Report

The year received $7 billion in total funding until December 5, a significant decline of 72 per cent, compared to $25 billion in the previous year.

Update: 2023-12-09 03:00 GMT

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BENGALURU: Funding in India’s tech startup ecosystem in 2023 has been the lowest in the last five years, dropping India’s global ranking from 4th to 5th place, a new report showed on Friday.

The year received $7 billion in total funding until December 5, a significant decline of 72 per cent, compared to $25 billion in the previous year.

Only two new unicorns were created this year -- Incred and Zepto -- as against 23 in the previous year and 119 acquisitions as compared to 187 acquisitions in 2022, a 36 per cent drop, as per Tracxn.

The funding declined across all stages, with late-stage funding dropping over 73 per cent, followed by early-stage funding (70 per cent) and seed-stage funding (60 per cent).

“While the funding slowdown in 2023 presents challenges for the Indian tech startup ecosystem, we remain optimistic about the future. With favourable government policies and a fast-growing economy, we believe India is well-positioned for success in the years to come,” said Neha Singh, co-founder, Tracxn.

Amid the funding slowdown, India has dropped from 4th place in 2022 and 2021 to fifth place among the highest-funded geographies globally in 2023.

The Q4 recorded the lowest funding of $957 million to date, marking it the lowest-funded quarter since Q3 2016. The decline is primarily due to the biggest drop in late-stage funding, by over 73 per cent to $4.2 billion in 2023 from $15.6 billion in 2022. The number of $100 million+ rounds recorded were only 17, dropping by 69 per cent compared to last year. FinTech, driven by increasing smartphone penetration and government initiatives towards a cashless economy, has received $2.1 billion in funding so far in 2023, a dip from $5.8 billion from the same period last year, said the report.

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