Startup Funding Falls To Its Lowest In At Least Five Years In July-September, Says Tracxn

Funding winter continued to impact India's tech startups as the third quarter of calendar year 2023 turned out to be the worst in at least five years, according to Tracxn.

After an increase in funding in Q4 of 2022, this is now the third consecutive consecutive drop in funding. The quarter saw inflows of about $1.5 billion, which is a 30% drop from the previous quarter and a 54% slide from a year earlier.

"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. It underscores the resilience of India's tech startups and their ability to adapt to changing market conditions," said Neha Singh, co-founder of Tracxn.

Of the $1.5 billion raised in the quarter, late-stage rounds made up about $1 billion. Early-stage rounds constituted $416 million and seed stage saw funding of $84.3 million.

There were several major funding rounds as well, with five exceeding $100 million, including companies such as Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365. Perfios led the way with a Series D round of $229 million. The third quarter also witnessed the creation of two unicorns, Zepto and Zyber 365.

“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 of Tracxn.

Geography-wise, Bengaluru emerged as the leader in total funds raised during Q3 2023, followed closely by Mumbai and Noida. Top investors in Q3 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.