Bengaluru, India, 11 April 2023: Tracxn, a leading global market intelligence platform, has released its ‘Tracxn Geo Quarterly Report: India Tech – Q1 2023.’ The report is the company’s quarterly proprietary document that provides a detailed overview of the Indian startup ecosystem by delineating funding activities, investor exits through acquisitions and IPOs, and wider trends in the fundraising landscape.
According to the report, in Q1 2023, Indian startups have raised a total of $2.8 billion in funds to date, which is 75% lower compared to the same period in the previous year ($11.9 billion). The drop in funding can be attributed to rising inflation and interest rates impacting investments significantly. Furthermore, funding volumes have been contracting due to the reduction in late-stage funding, which has declined by 79% in Q1’23 ($1.8 billion) compared to Q1’22. Early-stage rounds in Q1 of 2023 saw funding of $844M with a drop of 4% compared to Q4 2022 but a drop of 68% compared to Q1 of 2022. Moreover, seed funding rounds in Q1 2023 saw funding of $153M, a 16% drop from Q4 2022. Although funding has decreased YoY, the MoM comparison is more promising as Indian startups saw a significant uptick of 54% from $777M in February 2023 to $1.2B in March 2023.
This quarter has witnessed 9 $100M+ funding rounds with companies like PhonePe, Lenskart, Mintify, Insurance Dekho, FreshtoHome foods, TI Clean Mobility, and KreditBee sourcing big-ticket deals. PhonePe has raised a total of $650M in multiple Series D rounds in Q1 of 2023, valuing the company at $12 billion. While Lenskart raised $500M in a Series J round led by a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA) at a valuation of $4.5B.
The leading sectors in terms of funding this quarter were FinTech, Retail, and Enterprise Applications. The FinTech segment witnessed a funding growth of 150% compared to Q4 of 2022; however, this is a drop of 51% compared to Q1 2022.
The quarter did not lead to the creation of any new Indian unicorns, while Q1’22 saw 14 unicorns emerge. In terms of exits, the scenario has remained stable for acquisitions QoQ as 46 acquisitions took place compared to 43 in Q4 ’22. Gram Power, a provider of energy management solutions, was acquired by Squared Capital at a price of $100 million, and Adpushup, an ad optimization solutions provider, was acquired by Geniee at a price of $70 million. In IPOs, three companies – Robu Labs, Mars Capital, and Homesfy went public in the first quarter of 2023.
Other aspects highlighted in the report include Bangalore leading the total funds raised followed by Delhi and Mumbai as well as 100X.VC, CIE IIITH, and Accel are the top investors overall. In terms of the breakup of rounds participation, 100X.VC, CIE IIITH, and IPV were the top seed investors, Accel, Sequoia Capital, and Alteria Capital were the top early-stage investors, and Premji Invest, Elevation, and Chiratae Ventures were the top late-stage investors.