2023 sees lowest fund raise by Indian startups in last 5 years: Tracxn

Indian startups saw a significant funding decline of 72% in 2023, compared to $25 billion in the previous year, making it the lowest-funded year in the last five years.

According to a Tracxn report, the year has received $7 billion in funding until December 5. Between October and December 5, 2023, Indian startups raised $957 million in funding, the lowest quarterly amount since Q3 2016.

Late-stage funding took the biggest hit, plummeting by over 73% to $4.2 billion from $15.6 billion in 2022. Early-stage funding followed closely with a 70% drop, down to $2.2 billion from $7.3 billion, while seed-stage funding saw a notable decrease of 60%, from $1.7 billion in 2022 to $678 million in 2023.

This year, a total of 1,000 funding rounds were raised, a 63% drop from 2,763 rounds in 2022. Further, only 17 rounds exceeded the $100 million funding figure in 2023, down from 55 in the same period last year—a 69% decrease.

The Indian startup ecosystem, which ranked third globally in 2022 and 2021 in terms of funding raised, has dropped to fourth place in 2023.

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Lenskart's $500 million Series J led by Abu Dhabi Investment Authority was the largest round of 2023, followed by PhonePe's $350 million Series D led by General Atlantic.

In 2023, the top-performing sectors were fintech, retail, and enterprise applications, although they've seen a significant drop in funding compared to previous years.

Despite being a consistently well-funded sector, fintech received $2.1 billion in 2023, a decrease from the $5.8 billion in the same period last year. PhonePe secured the most funding in the sector for 2023, totalling $750 million in four Series D rounds.

100X.VC emerged as the most active seed-stage investor with 34 rounds in 2023. Y Combinator's investment activity dropped in India by 56%, with just 19 rounds in 2023.