Despite challenges, the startup ecosystem in India remains robust and poised for recovery, bolstered by government initiatives and favorable market conditions. India experienced a slowdown in Q1 2024 (until March 15), with $1.6 billion raised in funding after continuous growth in the previous three quarters of 2023. While these figures are lower compared to the same period in 2021 and 2022, India secured the fourth-highest position globally in terms of funding raised during this period, reflecting the resilience of its entrepreneurial landscape. These observations were made in the 'Geo Quarterly India Tech Report' which was released by Tracxn, a market intelligence platform.
As per the report, the quarter witnessed funding dynamics within the tech ecosystem, exhibiting varying trends across different stages. The report states that while late-stage funding experienced a significant drop of over 46 per cent, early-stage funding witnessed a notable increase of 28 per cent. The report further states that out of the $1.6 billion in funding, Shadowfax and Credit Saison received the highest funding of over $100 million. Capillary, Rentomojo, and Captain Fresh were also among the top-funded companies. The quarter also saw the emergence of two new unicorns, Perfios and Ola Krutrim, underscoring the resilience and potential of India's tech landscape. Additionally, IPO numbers surged, with eight tech companies going public, including MediaAssist, WTI, Exicom, and LawSikho, reflecting investor confidence in the sector.
The report also highlights that retail, fintech, and enterprise applications were the top-performing sectors in Q1. The retail sector received funding of $494 million, which was a decline of 34 per cent compared to the previous quarter; enterprise applications garnered $ 448 million, showing a growth of 48 per cent as compared to $302 million received in the previous quarter; and fintech received $429 million in funding, marking a 48 per cent growth from the last quarter's $289 million. The investment growth in the fintech sector is propelled by the rapid growth seen in smartphone penetration driving the cashless economy. Other favorable regulatory policies have also helped the sector receive consistent investor interest.
The report observes that overall there were 20 acquisitions during the quarter, a 33 per cent decrease from last quarter and a 55 per cent drop compared to 45 acquisitions in Q1 2023. Notable acquisitions included Pingsafe, a cloud security platform, which was acquired by SentinelOne, and Difenz, a fraud risk management platform, being acquired by Signzy. Eight companies went public in Q1 (Until March 15) 2024, compared to two in Q1 2023, showcasing the growing maturity of the Indian tech ecosystem.
As per the report, Bengaluru emerged as the leader in total funds raised during Q1 (Until March 15) 2024, followed closely by Mumbai and Noida, reaffirming the significance of these tech hubs in India's startup landscape. Venture Catalysts, We Founder Circle, and Titan Capital led the seed investments in Q1 2024, while Peak XV Partners, Saama Capital, and RTP Global were prominent in early-stage investments. Elev8, Epiq Capital Advisors, and UC-RNT Fund took the lead in the late-stage category this quarter.
"Despite the funding slowdown and economic fluctuations, India's tech startup ecosystem is still one of the top-performing tech ecosystems globally. Even with the slowdown seen in this quarter, we anticipate the bounce back quickly, propelled by government initiatives and a large consumer base comprising the world’s largest young population. India's strong tech ecosystem and demographic advantages promise a bright future and solidify its position as a global tech leader,” remarked Neha Singh, co-founder of Tracxn.
