The Indian technology startup ecosystem has recorded a huge decline of 72 percent in funding activity in 2023 compared to $25 billion in 2022. With this, this has become the year with the lowest investment in the last five years. A total capital of $ 7 billion has been received so far this year, due to which India has dropped from the fourth position in 2022 and 2021 to the 5th position in the list of most funded countries globally in 2023.
According to Traxon Jio Annual Report: India Tech 2023, the last quarter (Q4) recorded the lowest ever capital infusion of $957 million, making India the country that has attracted the least amount of investment since Q3 2026. has been made.
This decline is mainly due to the significant weakness in late-stage funding. This funding has declined by 73 percent from $15.6 billion in 2022 to $4.2 billion in 2023. The number of funding deals above $100 million was only 17, which is 69 percent less than last year.
Rising smartphone penetration and government initiatives towards a cashless economy have led to investments in fintech of $2.1 billion so far in 2023, significantly lower than $5.8 billion in the same period last year.
Payments major PhonePe has emerged as the top funded company in the sector, securing $750 million in four Series-D rounds. Parfios, InsuranceDekho and Creditbee were the other major funded companies this year.
The retail sector received investments of $1.9 billion, which is a decline of 67 percent compared to 2022. Lenskart raised $600 million in two Series-J rounds and emerged as the leading funded company in the space in 2023.
Enterprise applications, the third most funded sector in 2023, recorded a huge decline of 78 percent in terms of funding compared to last year. Investment of 1.56 billion dollars was achieved in this sector.
Despite the slowdown in funding, areas such as environment tech and spacetech attracted the attention of investors. Environment tech has raised $1.2 billion, while spacetech has raised $122 million so far in 2023, with 6 percent growth.
Other important points highlighted in the report include that only two new unicorns will be created in 2023 – InCred and Zepto, whereas last year this number was 23. At the same time, the number of acquisitions decreased by 36 percent to 119 as this figure was 187 in 2022.
However, this year there was no major decline in the number of IPOs. So far in 2023, IPOs of 18 tech companies have come, whereas in 2022 this figure was 19. Ideaforge, Yatra and Ikeo Lighting are some of the notable tech IPOs in 2023.
Bengaluru, Mumbai and Delhi-NCR continue to attract large investments in India’s tech startup ecosystem. LetsVenture, Accel and Bloom Ventures are leading investors supporting the growth of the Indian tech sector.
First Published – December 25, 2023 | 11:59 AM IST
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