Start-up funding declines by 72% in H1 2023

Indian start-up funding declined in H1 2023. A decline of 72% in funding signifies a challenging period for start-ups in terms of securing financial investments.

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Indian start-up funding declined during the first half of 2023. According to a report titled ‘Tracxn Geo Semi-Annual Report: India Tech- H1 2023’, the funding of Indian start-ups dropped in the first six months of 2023, largely due to a sharp dip in early-stage rounds.

The report by Tracxn (a SaaS-based market intelligence platform) said that there was a decline of 72% in start-up funding in H1 2023, as against H1 2022. The total funding in H1 2023 was about US$ 5.5 billion, much less than the funding worth US$ 19.7 billion, seen in the first half of 2022. 

As per the report, the funding rounds also declined from about 1,586 in H1 2022 to just 536 in the first half of this year. The early-stage rounds secured US$ 1.4 billion during the period, a decline of 73% from the first half of 2022. It was 44% less than in the second half of 2022.

The report noted that both seed stage and late stage rounds witnessed a fall of 71% in funding till June, as compared to last year. 

The leading sectors which were able to attract the most funding were environment tech, fintech, and retail. According to the report, “The retail sector enjoyed the boom of e-commerce in tier two and tier three cities, making it one of the top achievers. This boom has provided a national and international market to the MSMEs. Similarly, the adoption of digital payments has strengthened the fintech sector.”

India also saw a decline in the number of new unicorns in H1 2023 (about 19 new unicorns were registered during H1 2022). The leading investors of the year include IPV, Accel, and 100X.VC.