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Is Indian Startup Ecosystem in Trouble? Funding Slumps 75% YoY to $2.8 billion

Indian Startup

In terms of funding from investors, the Indian startup industry has been hit by macroeconomic challenges. According to Tracxn Geo Quarterly Report: India Tech – Q1 2023, Indian startup raised $2.8 billion in Q1 2023, a 75% decrease from the same period a year earlier ($11.9 billion).

As a result of rising inflation and interest rates, investments have declined significantly, according to the report.

Seed funding dropped 16% to $153 million in Q1 2023, while early-stage startup funding dropped 4% to $844 million.

A year ago, late-stage rounds in Q1 of 2023 had fallen 79% to $1.8 billion.

In January to March 2023, there were no new unicorns created, compared with 14 unicorns in the same period last year.

The month-over-month comparison is encouraging, as Indian startup saw a significant rise in funding – a 54% increase to $1.2 billion in March 2023 from $777 million in February 2023.

After the United States, India is the second most-funded geography

In Q1 2023, India was the second most-funded geography after the US. Despite taking second place, India’s funding continues to decline.

Overall funding in India declined by 21% in Q1 2023 compared to Q4 2022 and by more than 75% compared to Q1 2022. In Q1 2023, the number of funding rounds dropped by 10% and 63% compared to Q4 2022 and Q1 2022, respectively.

In the January-March quarter, big ticket deals included PhonePe, Lenskart, Mintify, Insurance Dekho, FreshtoHome Foods, TI Clean Mobility, and KreditBee.

In the March quarter, Bangalore raised the most funds, followed by Delhi and Mumbai.

This quarter’s top funding sectors were fintech, retail, and enterprise applications. Fintech funding increased by 150% compared to Q4 of 2022. However, it dropped by 51% compared to Q1 2022.

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I'm Shruti Mishra, Editorial Director @Newsblare Media, growing up in the bustling city of New Delhi, I was always fascinated by the power of words. This love for words and storytelling led me to pursue a career in journalism. In this position, I oversee the editorial team and plan out content strategies for our digital news platform. I am constantly seeking new ways to engage readers with thought-provoking and impactful stories.

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