Startup funding hits a 5-year low in July-September quarter

• Two startups – Zepto and Zyber 365 – turned unicorns during the quarter.
• Startup funding declined QoQ, but showed an impressive MoM growth in September.
• Fintechs raised as much as $436 million, marking a 68% QoQ growth.
  

Indian startup funding hit a five-year low in the third quarter of the calendar year, says a report by Tracxn. Startups raised $1.5 billion in Q3 – shrunk by almost a third on a when compared to the previous quarter, and halved year-on-year.

Early-stage and seed-stage funding plummeted by 74% and 75% respectively, on a YoY basis. Late-stage rounds, in comparison, witnessed a 33% reduction.

“Despite the decline in funding, India remains among the top-performing tech ecosystems globally. A promising sign in the report is the month-on-month funding growth, with an impressive 91% increase from $376 million in August 2023 to $720 million in September 2023,” said Abhishek Goyal, co-founder of Tracxn.

Fintechs received $436 million in funding, marking a 68% QoQ growth – making it the best performing sub-sector. “The investment growth in fintech is propelled due to the rapid growth seen in the adoption of UPI both in the domestic market and international markets like Bhutan, France, UAE, Saudi Arabia, Bahrain, and Singapore,” Tracxn said.

Enterprise applications funding rose by 51%, while transportation and logistics tech raised $375 million, showing a drop of 72%.

Only 2 unicorns added to the list

Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365 raised over $100 million each. Of these, Zepto and Zyber 365 turned unicorns. They are also the only two unicorns added in the quarter.

Perfios, which provides data analysis tools, raised $229 million in a Series D round.

There were 33 acquisitions during the quarter – which was a 13% decrease from Q3 2022. Some of the notable acquisitions included Route Mobile's acquisition by Proximus Group for $718 million and Marico’s acquisition of Plix for $45.1 million.

Drone Destination, Aha Solar, IdeaForge, and Veefin went public during the quarter, showcasing the growing maturity of the Indian tech ecosystem, says Tracxn.

“India ranks as the fifth highest funded country in Q3 2023 and maintains its fourth-place position in terms of total funding for the year to date (YTD). It underscores the resilience of India's tech startups and their ability to adapt to changing market conditions,” said Neha Singh, co-founder, Tracxn.

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