The funding winter continues as the Indian startup ecosystem recorded its third consecutive drop in quarterly funding raised in Q3 2023.
Between July and September, Indian startups raised a total of $1.5 billion across 166 rounds, marking a 30% decrease from the previous quarter, as per Tracxn Geo’s quarterly report. This makes Q3 2023 the least funded quarter not just this year but also in the last five years.
On an annual basis, this is 54% less than the funding of $3.4 billion across 592 rounds raised during the same period in 2022. Late-stage funding saw a decline of 33% while early-stage funding dropped by 74% and seed-stage funding experienced a 75% decrease.
However, despite this decline, the month-on-month funding increased significantly from $376 million in August to $720 million in September.
Notably, the quarter witnessed five funding rounds exceeding $100 million—with companies like Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365 securing substantial investments.
Perfios raised $229 million in a Series D round, Zepto raised $200 million in a Series E round, and Ola Electric and Ather Energy raised $140 million and $109 million, respectively.
The report added that India ranked the fifth highest-funded country in the third quarter of 2023 and the fourth in total funding for the year.
India followed the United States, the United Kingdom, China, and France in terms of total funding raised in 2023. Startups in the United States raised $19.8 billion while China got ahead of India with just $410 million of additional funding. Sweden closely followed India at $1.47 billion in funds raised.
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In Q3 2023, the best-performing sectors in the technology industry were enterprise applications, fintech, and transportation and logistics tech. Funding for enterprise applications rose by 51%, while fintech received $436 million, marking a 68% increase from Q2 2023.
The July-September quarter also saw the creation of two unicorns (Zepto, Zyber 365), a 50% decrease from the previous year.
There were 33 acquisitions, with notable ones being Route Mobile acquired by Proximus Group for $718 million and Plix, a plant-based nutrition brand, acquired by Marico Limited for $45.1 million.
Meanwhile, Inflection Point Ventures (IPV) emerged as the most active seed-stage investor in India, funding eight companies in Q3 2023, followed closely by 100X.VC, which made four investments in the same quarter.
Edited by Saheli Sen Gupta
