Indian startup funding dives 75% YoY to $2.8 bn in Q1 of CY 2023: Tracxn

Deal values dip sequentially as well; despite this India emerges as second-highest funded nation, behind the US

Funding in the Indian start-up ecosystem plunged by as much as 75 per cent year-on-year (YoY), to $2.8 billion across 301 deals in the first quarter of this calendar year. This compares to the $11.9 billion that start-ups brought in from 816 deals during the same period last year.

Total funding also declined by 21 per cent compared to Q4 2022. The previous quarter saw budding companies raise $3.7 billion from 347 deals.

This was characterised by a fall in late-stage deals, which fell 79 per cent YoY to $1.8 billion, compared to 8.8 billion in Q1 2022. Quarter-on-quarter, the decline was 23 per cent in comparison to Q4 2022. Rising inflation and interest rates impacted investments significantly.

Regardless, India emerged as the second-highest funded geography in Q1 2023, behind the US.

Funding has also seen a significant month-on-month improvement on the back of large deals from Lenskart and PhonePe, which raised $500 million and $350 million respectively. March saw start-ups raise a total of $1.2 billion, compared to $777 million in February, an increase of 54 per cent.

No unicorns were created in Q1 of 2023, versus 14 unicorns in the year ago period. The quarter saw 46 acquisitions and three IPOs.