Funding in technology startups across states with the biggest and emerging startup ecosystems dropped in 2023, according to data from startup data platform Tracxn. The decline was above 60 per cent across Maharashtra, Delhi NCR, Karnataka, Tamil Nadu and Gujarat-based startups.
For instance, total funding in Maharashtra-based technology startups dropped 62.5 per cent to $2.1 billion in 2023, from $5.6 billion in 2022 with the number of over $100M rounds declining to four in 2023 from 13 in 2022. The number of acquisitions also fell to 34 in 2023 from 40 in 2022. Retail, health tech, and transportation & logistics tech were the top-funded segments in 2023.
For Delhi NCR tech startup ecosystem, the investment plummeted 61 per cent to $1.5 billion in 2023, from $3.8 billion in 2022. The number of rounds above $100 million had declined to two in 2023 from seven in 2022. During the year, retail, enterprise applications, and fintech were the top-funded segments in the region.
Likewise for Karnataka, which holds the first position in India in terms of overall funding to date and in 2023, the total funding in its technology startups declined 72 per cent to $3.4 billion in 2023, from $12.2 billion in 2022. Early-stage funding in 2023 in the state stood at $784 million, down 71 per cent from the $2.7 billion raised during the previous year while seed-stage funding fell 54 per cent to $294 million from the $643 million raised in 2022.
Tamil Nadu too, which ranked sixth among the top-funded states in India based on the funding to date, secured $255 million in 2023 for its tech startups, becoming the fourth highest funded state in 2023 after Karnataka, Maharashtra and Haryana. However, there was a decline in funding from 2022 to 2023, due to investor reluctance brought on by macroeconomic factors, recession anxieties and rising interest rates, as per Tracxn.
Gujarat also recorded a 66 per cent drop in tech startup funding to $139 million in 2023 from $412 million in the previous year. Seed-stage funding in 2023 stood at $38 million, an increase of 28 per cent compared with $29 million raised in 2022.
However, Kerala stood out from the pack. The technology startups based in the southern state raised $33.2 million in 2023, an uptick of 15 per cent from $28.9 million raised in 2022. Seed-stage investments jumped 40 per cent to $26.2 million in 2023 from $18.7 million raised during the previous year.
Nonetheless, Indian startups overall had recorded a drop across multiple growth metrics in 2023 with a 67 per cent decline in funding, 59 per cent drop in funding rounds, 63 per cent drop in Series A+ rounds, 52 per cent decline in first-time funded companies, 68 per cent decline in new additions to soonicorn club, 91 per cent drop in new unicorns, 32 per cent drop in acquisitions and 5 per cent decline in initial public offerings (IPOs).
Funding dropped to $8.3 billion from $25.6 billion in 2022, funding rounds declined to 1,133 from 2,781, Series A+ rounds dropped to 318 from 882 in 2022, count of first-time funded companies declined to 423 from 896, 2023 saw 113 additions to soonicorn club in comparison to 364 in 2022, acquisitions dropped to 127 from 188 in 2022, and IPO count also reduced to 18 from 19 in 2022.