Tracxn Geo Semi-Annual Report: Funding In Indian Start-Up Ecosystem Declines by 24% In H1 2023

Tracxn, a SaaS-based market intelligence platform has unveiled its latest report, the Tracxn Geo Semi Annual Report: India Tech- H1 2023. 

The report reveals that the Indian start-up ecosystem faced a challenging first half of 2023 as funding experienced a significant decline. While still ranking among the top three funded geographies globally (after the US and the UK), the region's funding trend mirrored the declining scenario witnessed around the world. 

The total funding in the first half (H1) of 2023 ($5.5 billion) declined by 24 per cent compared to the second half (H2) of 2022 ($7.3 billion), and a staggering 72 per cent drop compared to the first half of 2022 ($ 19.7 billion). 

The number of funding rounds also experienced a substantial decrease in H1 2023 (536), with a drop of 43 per cent compared to H2 2022 (946) and 66 per cent compared to H1 2022 (1586).

Late-stage rounds in H1 2023 witnessed a decline of 71 per cent, amounting to $3.8 billion, compared to H1 2022. Early-stage rounds secured $1.4 billion, reflecting a 44 per cent decline from H2 2022 and a significant 73 per cent drop from H1 2022. Seed-stage rounds faced a similar fate, with a 41 per cent drop from H2 2022 and a 71 per cent fall from H1 2022, securing only $315 million in funding. Comparing quarterly data from this year, both Q1 and Q2 2023 raised similar amounts of funding. Q2 2023 witnessed $2.7 billion in funding, a 65 per cent decline from the same period in 2022, and Q1 2023 raised $2.8 billion, reflecting a 76 per cent decline from the previous year.

Despite these challenges, the first half of 2023 witnessed 14 funding rounds surpassing $100 million, marking a 17% increase from H2 2022. 

Commenting on the findings of their report, Neha Singh, Co-Founder, Tracxn said, “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 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.”