After continuous growth in startup funding in the previous three quarters of 2023, the Indian startup ecosystem saw a slowdown in the first quarter of 2024. According to Tracxn’s Geo Quarterly India Tech Report – Q1 2024 (till March 15), $1.6 billion was invested in the first quarter across 222 rounds, down by 27 per cent from $2.2 billion in 291 rounds in Q4 2023. In Q3 last year, $1.9 billion was invested in 269 rounds and $1.6 billion was invested across 360 rounds in Q2.
The Q1 drop was 51 per cent from $3.2 billion invested in startups in Q1 2023 while funding rounds also declined by 48 per cent from 432 in Q1 last year.
“Even with the slowdown seen in this quarter, we anticipate the bounce back quickly, propelled by government initiatives and a large consumer base comprising the world’s largest young population. India’s strong tech ecosystem and demographic advantages promise a bright future and solidify its position as a global tech leader,” said Neha Singh, Co-Founder, Tracxn.
Stage-wise, late-stage funding saw the biggest drop this quarter, dropping by over 46 per cent to $0.67 billion in Q1 2024 till date from $1.25 billion raised in the same period Q4 2023 and dropping by 48 per cent compared to $1.3 billion raised in the same period in Q1 2023.
Similarly, seed-stage funding also recorded a minor drop of 7 per cent to $168 million in Q1 2024 from $180 million in the same period in Q4-2023. The numbers remained the same as compared to Q1 2023.
In contrast, early-stage funding witnessed a rise in funding this quarter, an increase of 28 per cent with $745 million raised in Q1 2024 to date compared to $580 million raised in the same period Q4 2023. Although, this accounted for a 3 per cent drop compared to $766 million raised in the same period in Q1 2023.
However, despite the drop, India secured the fourth-highest position globally in terms of funding raised during this period after the US ($19.5 billion), Europe ($9.2 billion) and China ($2.8 billion).
The top funding rounds during Q1 were $144 million by digital NBFC Credit Saison followed by $100 million by logistics startup Shadowfax, $95 million by cloud company Capillary, and more.
In terms of sectors, $494 million was invested in retail in Q1 2024, up by 139 per cent from $206 million invested in the same period Q1 2023. The second highest funded sector was enterprise applications receiving $448 million, growing by 86 per cent from $241 million raised in the same period Q1 2023.
Among the top investors, Venture Catalysts, We Founder Circle, and Titan Capital were the lead investors in the seed stage in Q1 2024 while Peak XV Partners, Saama Capital, and RTP Global were the most active investors in the early stage. In late stage, Elev8, Epiq Capital Advisors, and UC-RNT Fund were the leading investors.