Indian startups have raised $2.8 billion in funds in the first quarter of 2023, a 75 percent drop vs the same period last year ($11.9 billion), according to a report by Tracxn, a market intelligence platform.
In Q1 2023, no new unicorns were created compared to 14 unicorns in Q1 2022. The decrease in VC funding volumes was due to the reduction in late-stage funding, which declined by 79 percent in Q1 2023 ($1.8 billion) compared to Q1 2022.
Early-stage rounds saw funding of $844 million, a drop of 4 percent compared to Q4 2022 but a drop of 68 percent compared to Q1 2022. Additionally, seed funding rounds in Q1 2023 saw funding of $153 million, a 16 percent drop from Q4 2022.
However, the month-on-month comparison is more promising as Indian startups saw a significant uptick of 54 percent from $777 million in February 2023 to $1.2 billion in March 2023. Total funding declined by 21 percent in Q1 2023 as compared to Q4 2022.
Nine funding rounds, more than $100 million, were witnessed in the quarter, with leading sectors being fintech, retail, and enterprise applications. In terms of exits, the report mentioned that the scenario has remained stable for acquisitions quarter-over-quarter, with 46 acquisitions taking place in Q1 2023 compared to 43 in Q4 2022.
The first quarter witnessed nine, more than $100 million funding rounds with companies like PhonePe, Lenskart, Mintify, Insurance Dekho, FreshtoHome foods, TI Clean Mobility and KreditBee sourcing big-ticket deals.
PhonePe raised a total of $650 million in multiple Series D rounds in Q1 of 2023, valuing the company at $12 billion.
Lenskart raised $500 million in Series J round led by a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA) at a valuation of $4.5 billion.
The leading sectors in terms of funding this quarter were fintech, retail and enterprise applications.
The fintech segment witnessed a funding growth of 150 percent compared to Q4 of 2022; however, this is a drop of 51 percent compared to Q1 2022.