India’s prominence in the global startup growth ecosystem encountered a setback as the country descended to the fourth spot in terms of funding, marking its lowest inflow in the past five years.
Tracxn, a renowned global market intelligence platform, compiled data revealing that India, after securing the third global position consecutively in 2021 and 2022, lagged behind the US, the UK, and China in 2023, amassing a mere $7 billion in total funding until December 5.
The downturn was conspicuous in the third quarter (Q3) of 2023, where India slipped to fifth place in funding among nations, trailing the US, the UK, China, and France. During Q3, the country managed to raise only $1.5 billion, witnessing a staggering 30% dip from Q2 2023 and a substantial 54% drop from Q3 2022.
Startup Growth Story of India: Funding Plunge Marks Lowest Inflow Since 2016
The final quarter (Q4) of 2023 further exacerbated the situation, registering the lowest funding of $957 million, marking it as the least funded quarter since Q3 2016.
The Tracxn report highlighted the persistent decline in funding, and startup growth attributing it to what they termed as the “funding winter” experienced by India’s tech sector. Despite this dwindling trend, India managed to retain its position among the top five geographies globally in terms of total funding throughout 2023.
The report underscored a widespread funding decline across all stages throughout 2023. Late-stage funding took the hardest hit, plummeting over 73% to $4.2 billion from $15.6 billion in 2022. The number of rounds surpassing $100 million dwindled to a mere 17, marking a 69% decrease from the previous year.
The comprehensive decline across various funding stages signals a challenging landscape for India’s startup ecosystem, raising concerns about the sustained growth of the sector in the coming years.
