2023 downturn- Indian tech startup ecosystem closes year in red across multiple metrics

2023 downturn: Indian tech startup ecosystem closes year in red across multiple metrics

The Indian technology ecosystem has recorded a drop across multiple growth metrics in 2023 as investors grew more cautious about spending and growth without promising bottom line and concerning valuations. A full-year data from startup data platform Tracxn showed a 67 per cent decline in funding, 59 per cent drop in funding rounds, 63 per cent drop in Series A+ rounds, 52 per cent decline in first-time funded companies, 68 per cent decline in new additions to soonicorn club, 91 per cent drop in new unicorns, 32 per cent drop in acquisitions and 5 per cent decline in initial public offerings (IPOs).

Funding dropped to $8.3 billion from $25.6 billion in 2022, funding rounds declined to 1,133 from 2,781, Series A+ rounds dropped to 318 from 882 in 2022, count of first-time funded companies declined to 423 from 896, 2023 saw 113 additions to soonicorn club in comparison to 364 in 2022, there were only two unicorns (Zepto and Incred Finance) in 2023 vis-a-vis 23 in 2022, acquisitions dropped to 127 from 188 in 2022, and IPO count reduced to 18 from 19 in 2022.

Deal volume mirrored the fall as seed rounds declined to 815 from 1,899 rounds in 2022. Likewise, early-stage deals declined to 234 from 633 and late-stage deals dropped to 84 from 249.

Among the top deal makers were PhonePe with $623 million raised during the year followed by $500 million by Lenskart, $140 million by Ola Electric, $229 million by Perfios, $135 million by GreyOrange, and more, the report showed. However, according to PhonePe, it raised $850 million in four Series D rounds during the year.

In terms of investors, other than We Founder Circle and 100X.VC, most investors made fewer bets in 2023. For instance, Venture Catalysts’ deal volume dropped 19 per cent to 21, Accel made 10 deals with a 58 per cent decline from 2022, Peak XV Partners made seven deals with a 61 per cent drop from 2022, Elevation Partners made four deals with a 71 per cent drop, and more.

Despite the decline, Blume Ventures, Accel, Peak XV Partners, Better Capital, and Titan Capital were among the most active investors.