Funding in the Indian startup ecosystem rose 3% from $935 million in December 2022 to $962 million in January 2023, thanks to a small increase in late-stage funding. The number of funding rounds, however, dropped by 22% during the same period.
According to Tracxn’s India Tech Monthly Funding report, late-stage funding accounted for the increase in funding with a total of $688 million being raised in January 2023, an increase of 16% compared with December 2022.
Seed-stage funding saw a decrease of 9% from $61 million in December 2022 to $56 million in January 2023, while early-stage funding saw a decline of 30% from $283 million to $199 million.
January saw at least two $100 million rounds from fintech apps PhonePe and KreditBee. PhonePe had raised $350 million in a Series D round led by General Atlantic at a pre-money valuation of $12 billion.
The company had recently changed its domicile to India from Singapore at a cost of about $972 million. The reasons for this move were cited as India being the primary market for the company and all its employees being based within the country.
KreditBee, an online marketplace for personal loans, raised $120 million in Series D funding led by Advent International. This round occurred just a month after an $80 million funding round in December 2022 led by MUFG.
The top three sectors that received the most funding in January are fintech, enterprise applications and energy tech. The fintech sector has seen a rise of 144% in investments from $261 million in December 2022 to $637 million in January 2023. The increased adoption of digital financial services like UPI by consumers has been the major reason for the hike. The introduction of CBDC (Central Bank Digital Currency) is also expected to boost the sector, Tracx pointed out in its report.
Energy tech has seen a substantial increase of 386% month on month. Favourable government policies and increasing concerns on pollution are the major factors accelerating growth in this space.
Food and agriculture tech has seen the maximum fall in funding of 82% from $319 million in December 2022 to $56.8 million in January 2023. However, the Union Budget, which proposed the formation of the Agriculture Accelerator Fund, may help accelerate funding into the sector in the next few quarters.
Besides, January saw 14 acquisitions, a rise of 17% month-on-month from 12 acquisitions in December 2022. Accel, Sequoia Capital and Y Combinator are the top investors in India for January 2023. Bengaluru saw the maximum funding raised, followed by Delhi-NCR and Hyderabad in January 2023, the Tracxn report added.