The Tracxn Geo Annual Report: Karnataka Tech 2023 has provided a round-up of funding and other developments in the Karnataka tech space in 2023.
According to an official release, the Karnataka tech startup ecosystem holds the first position in India in terms of overall funding to date and in 2023. The state is believed to have a startup ecosystem, with more than 18,000 startups, and is also home to 39% of the unicorn companies in the country. It’s believed that this space witnessed a decline in funding in 2023, when compared with the previous year, over prevailing macroeconomic conditions and geopolitical issues. Reportedly, the Karnataka tech startup ecosystem received a total funding of $3.4 billion in 2023, which is a 72% plunge from the $12.2 billion raised in 2021, and an 83% decline from the $20.4 billion raised in 2021. Seemingly, companies in this space attracted late-stage investments worth $2.3 billion in 2023, a 74% decline compared with $8.9 billion in 2022. Early-stage funding in 2023 stood at $784 million in funding, a drop of 71% from the $2.7 billion raised during the previous year. Seed-stage funding fell 54% to $294 million from the $643 million raised in 2022.
From what it’s understood, eight, more than $100 million, funding rounds were observed in this space in 2023, as against 26 and 44 such rounds in 2022 and 2021, respectively. Reportedly, PhonePe and Udaan secured the highest funding in 2023, raising $623 million and $377 million in Series D and Series E funding rounds, respectively. Further, no new unicorns seemingly emerged from this space in 2023, a contrast from seven unicorns in 2022 and 18 in 2021. Official data has shown that fintech, retail, and enterprise applications were the top-funded segments in 2023. Sources suggest that the fintech sector in Karnataka secured a total funding of $1.15 billion in 2023, a decline of 51% compared with $2.4 billion raised during the previous year.
Moreover, the retail sector witnessed total funding of $956 million in 2023, a decline of 56% compared with the $2.16 billion raised in 2022. Companies in the enterprise applications sector are believed to have attracted investments worth $928 million in 2023, a plummet of 68% from the $2.89 billion raised in 2022. In 2023, the Karnataka tech sector is understood to have witnessed 35 acquisitions, lower than 48 acquisitions in 2022 and 57 acquisitions in 2021. None of the companies from this space went public in 2023, as against two IPOs in 2022. Reportedly, Bengaluru took the lead in terms of city-wise funding in 2023. Startups based in Bangalore raised $3.4 billion in 2023, while those based in Hubli raised $121,000. From what it’s understood, Accel, Wellfound, and LetsVenture are the top investors in the state of Karnataka till date. We Founder Circle, Y Combinator, and 100X.VC were the top seed-stage investors, Accel, Lightspeed Venture Partners, and Kalaari Capital were the top early-stage investors, and Footpath Ventures, Founders Circle Capital, and DST Global were the top late-stage investors.
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