Indian tech funding hits 5-year low with third consecutive quarterly decline: Report

After witnessing a surge in investments during the fourth quarter of 2022, the Indian technology sector has seen funding decline for three consecutive quarters, culminating in a notable dip in the third quarter (Q3) of 2023.  

In Q3, technology start-ups raised a total of $1.5 billion, marking a 29 per cent decrease from the previous quarter and a staggering 54 per cent decline compared to the Q3 of 2022, according to Tracxn’s Geo Quarterly Report India Tech Q3 2023.  

Late-stage rounds witnessed a 33 per cent reduction, while early-stage and seed-stage funding plummeted by 74 per cent and 75 per cent compared to the same quarter the previous year (Q3 2022), respectively.  

There were five funding rounds exceeding $100 million, raised by companies such as Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365, with Perfios topping the charts with a Series D round of $229 million.  

Enterprise applications, fintech, and transportation and logistics tech were the top-performing sectors in Q3 2023. Enterprise applications funding rose by 51 per cent and fintech saw 68 per cent growth while transportation and logistics tech investments came third though the value declined 72 per cent from the previous year.

The quarter saw just two new unicorns—Zepto and Zyber 365—representing a 50 per cent decline compared to the previous year. Additionally, there were 33 acquisitions during the quarter, which was 13 per cent lesser than Q3 2022.  

Among cities, Bengaluru topped the funding list, followed closely by Mumbai and Noida.  

Top investors in Q3 2023 included Accel, Blume, and Peak XV Partners. IPV, 100X.VC and Titan Capital led the seed investments, while Elevation, Tiger Global Management, and Accel were prominent in early-stage investments. In the late-stage category, Glade Brook Capital took the lead.  

As per a report by London-based data and analytics firm GlobalData, India accounted for 5.3 per cent of the total number of VC funding deals announced globally during January-August 2023. India’s share of the total disclosed funding value stood at 3.1 per cent.

During this the eight-month period, 734 VC funding deals were announced, amassing a total of $4.9 billion, which marks a 42 per cent YoY decline over 1,266 VC funding deals announced during January-August 2022. The corresponding deal value declined by a massive 71.5 per cent YoY compared to $17.1 billion worth of funding raised during the same period last year.

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