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India's Startup Ecosystem Drops To 5th Place Globally In Funding Rankings: Report

Updated: Dec 09, 2023 01:52:49pm

India's Startup Ecosystem Drops To 5th Place Globally In Funding Rankings: Report

New Delhi, Dec 9 (KNN) India's startup ecosystem slides down to 5th position from 4th in the list of world's most highly funded regions, according to a report by startup data firm Tracxn. 

This is due to a notable funding slowdown in the ecosystem this year. This year saw startup funding plummet 72 per cent to just USD 7 billion, compared to USD 25 billion in the previous year, making it the lowest-funded year in the last five years. 

Till now, Q4 2023 recorded the lowest funding of USD 957 million to date, becoming the lowest-funded quarter since Q3 2016. 

Funding for the startup economy dropped across different rounds of investments, but late-stage funding took the biggest hit after it fell by over 73 per cent to ISD 4.2 billion in 2023 from USD 15.6 billion in 2022. Early-stage and seed-stage funding  also saw similar declines of 70 per cent and 60 per cent, respectively. 

Additionally, the country’s tech ecosystem saw only 17 rounds worth over USD 100 million in 2023 till date as compared to 55 in the same period last year, recording a 69 per cent drop. 

Aa per reports, Only two unicorns, which are companies with a valuation of over USD 1 billion, were created in 2023 till now, including fintech firm Incred and hyper local delivery service Zepto. This is compared to 23 unicorns created in 2022. 

However, companies went public at a similar pace as last year, and the year till now has seen 18 initial public offerings (IPOs) from startups, just one shy of the 19 recorded last year. 

Lenskart, PhonePe, Perfios, and Zepto were some of the top funded companies in India in 2023, highlighting fintech and retail companies’ as successful outliers in the current funding winter. Fintech was the highest funded sector in the current year till date, receiving USD 2.8 billion in funding, which is still a huge drop from USD 5.8 billion last year. 

Retail tech saw funding of USD 1.9 billion in 2023, a 67 per cent drop compared to last year. Lenskart, with USD 600 million raised in two Series J rounds, emerged as the top-funded company in the sector this year. 

All is not lost, however, as some new sectors have emerged as promising to investors. Space tech, whose growth has been propelled by its privatisation by the government, saw a 6 per cent increase with USD 122 million raised so far in 2023, while environment tech received USD 1.2 billion in funding. 

(KNN Bureau)


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