The startup ecosystem witnessed a 72 per cent decline in funding in H1 2023 compared to H1 2022, according to the India Tech semi-annual report 2023 by market intelligence platform Tracxn.
The total funding in H1 2023 was about $5.5 billion, much lower than the $19.7 billion in the first half of 2022.
The early-stage round funding was also impacted, securing $1.4 billion in the first half of this year, reporting a 44 per cent decline from the previous half-year.
When compared to the $7.3 billion funding in H2 2022, the funding value saw a 24 per cent decline in the last six months.
It is not just the funding value, but the funding rounds have also declined from about 1,586 in H1 2022 to just 536 in the first half of this year, according to the report.
The top sectors that attracted the most funding were environment tech, fintech, and retail. “The retail sector enjoyed the boom of e-commerce in tier two and tier three cities, making it one of the top achievers. This boom has provided a national and international market to the MSMEs. Similarly, the adoption of digital payments has strengthened the fintech sector,” said the report.
India did not get a new unicorn during this period, compared to the previous year’s 19 new unicorns during H1 2022. Acquisitions also declined during the period by 52 per cent at 74 startups. The notable acquisitions included Gram Power, an energy management solutions company, acquired by Square Capital for $100 million, and Adpushup, an advertisement optimization company, acquired by Genee for $70 million.
Also read: Global e-commerce market may hit $8.5 trillion by 2026: Report
Bengaluru was the preferred area receiving the highest amount of funding, followed by Delhi-NCR and Mumbai. 100X.VC was the top seed investor during this period, while Peak XV Partners, Accel, and Athera were the active late-stage investors.
The funding has been witnessing a downward trend globally and is not just limited to India. Interestingly, the Indian startup ecosystem is one of the top three funded geographies in H1 2023, after the US and the UK.
The report covered funding raised by startups and investors’ exit through acquisitions and IPOs.