Funding challenges continue for Indian tech startups with the third quarter (Q3) of 2023 (ended September 26) the least funded period in the past five years, data from the market intelligence firm Tracxn showed.
Following a surge in startup funding during Q4 2022, there have been consecutive declines in funding in the subsequent three quarters. The third quarter saw startups raising a total of $1.5 billion, marking a 29% drop sequentially and a 54% crash from a year ago.
The report, dated Wednesday (September 27) further indicated a 33% reduction in late-stage funding rounds, and drastic declines of 74% and 75% in early-stage and seed-stage funding, respectively, compared with the same quarter a year earlier.
“The valuations have been adjusting, too. Now, investors have time to deep dive into companies and not commit to deals in short periods. It’s a good time for everyone to come back to fundamentals,” Nao Murakami, founder and general partner of Incubate Fund Asia, which marked the first close of its third fund last week, had told ET.
On the other hand, companies such as Perfios, Zepto, Ola Electric and Ather Energy shrugged off the funding winter with raises exceeding the $100 million mark. While business-to-business fintech solutions provider Perfios led the way with a Series D funding round of $229 million, the quarter saw the emergence of a new unicorn in quick-commerce delivery app Zepto.
The enterprise applications, fintech and logistics tech sectors were also among the top performers during the period reported.
Enterprise applications funding rose 51% from the previous quarter, Tracxn said, adding that fintech received $436 million in funding, marking a 68% growth. Transportation and logistics tech startups raised $375 million, a drop of 72%.
Acquisitions during the quarter included Route Mobile’s acquisition by Proximus Group for $718 million and Marico Limited’s acquisition of Plix for $45.1 million. Q3 recorded 33 acquisitions in all, marking a 13% decrease.
Meanwhile, four companies — Drone Destination, Aha Solar, IdeaForge, and Veefin — went public during the quarter.
“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,” Tracxn co-founder Abhishek Goyal said.
