Q3 2023 Witnesses Lowest Startup Funding in 5 Years with Only 2 New Unicorns

• ByStartupStory     |    September 28, 2023

In a recent report by Tracxn, it was revealed that the third quarter of 2023 witnessed the lowest funding for Indian startups in the last five years. During this period, fund inflows amounted to approximately $1.5 billion, marking a 30% decrease from the previous quarter and a significant 54% decline compared to the same period the previous year.

The report highlighted that only two new unicorns, Zepto and Zyber 365, emerged in the third quarter, further underlining the challenging funding environment.

However, there were notable funding rounds in the July-September quarter, with companies like Perfios, Zepto, Ola Electric, Ather Energy, and Zyber 365 raising $100 million or more. Leading the way was Perfios, securing a substantial Series D round of $229 million.

The fintech sector stood out with a 68% growth from the previous quarter, driven by the widespread adoption of the Unified Payments Interface (UPI) in both domestic and international markets.

Neha Singh, co-founder of Tracxn, commented on the findings, stating, “Despite facing the challenges of a funding winter, 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. It underscores the resilience of India’s tech startups and their ability to adapt to changing market conditions.”

The report also noted that after a surge in startup funding in the fourth quarter of 2022, the decline observed in funding during July-September 2023 marked the third consecutive drop.

Breaking down the $1.5 billion raised in Q3 2023, late-stage rounds accounted for approximately $1 billion, early-stage rounds saw $416 million, and seed-stage funding amounted to $84.3 million.

In terms of cities, Bengaluru led with the highest total funding, followed by Mumbai and Noida. The report pointed out a promising sign—month-on-month funding growth, showing a remarkable 91% increase from $376 million in August 2023 to $720 million in September 2023.

Abhishek Goyal, co-founder of Tracxn, emphasized, “Despite the decline in funding, India remains among the top-performing tech ecosystems globally.” This resilience and growth potential showcase India’s enduring position as a dynamic hub for startups, even in challenging times.

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