Despite Karnataka’s top position in overall funding and unicorn count, its tech startup funding plummeted by 72% to $3.4 billion in 2023, according to Tracxn’s report. The decline is stark, with late-stage investments dropping by 74% to $2.3 billion and early-stage funding decreasing by 71% to $784 million compared to previous years. Only two startups, PhonePe and Udaan, secured significant funding in 2023. Tracxn’s report also highlighted the absence of new unicorns and IPOs from Karnataka’s tech startup scene in 2023, a departure from previous years.
The report identifies fintech, retail, and enterprise applications as the top-funded segments in 2023, with significant declines in funding across all sectors compared to previous years. Bengaluru led city-wise funding with startups raising $3.4 billion in 2023. Karnataka’s status as a startup-friendly state, marked by its dedicated Startup Policy since 2015, is juxtaposed with the funding decline.
Pratekk Agarwaal, founder of GrowthCap Venture, attributes the funding downturn to macroeconomic and geopolitical factors, alongside political instability and regulatory shifts. He emphasizes the investor focus on seasoned founders and regulatory compliance. Anirudh A Damani, Managing Director of Artha Venture Fund, underscores the shift towards sustainable business models and long-term value creation in the current funding landscape.
