India's Tech Sector Report: Q3 2023 Becomes Least Funded Quarter In Last 5 Years The report highlighted that Enterprise Applications, Fintech, and Transportation and Logistics Tech were the top-performing sectors in Q3 2023
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Tracxn, a market intelligence platform, has unveiled its Geo Quarterly Report India Tech- Q3 2023 that provides insights into the state of India's technology ecosystem, highlighting key trends and developments in the third quarter of 2023.
According to the report, India continues to hold its ground as a prominent player in the global tech funding landscape. Following an increase in funding in Q4 2022, the India Tech space is seeing a decline in funding every quarter, with a third consecutive drop in funding in Q3 2023 making it the least funded quarter in 2023 and also the least funded quarter in the last five years.
Q3 2023 saw a significant drop in funding, with a total of $1.5 billion raised, marking a 29% decrease from the previous quarter and a staggering 54% decline compared to Q3 2022. Late- stage rounds witnessed a 33% reduction, while early-stage and seed-stage funding plummeted by 74% and 75% compared to the same quarter the previous year (Q3 2022), respectively, said the report.
"This comprehensive report sheds light on the evolving dynamics of India's tech ecosystem, providing valuable insights for entrepreneurs, investors, and industry stakeholders. Despite facing the challenges of a funding winter, India ranks as the fifth highest funded country in Q3 2023 and maintains its fourth-place position in terms of total funding for the year to date (YTD). It underscores the resilience of India's tech startups and their ability to adapt to changing market conditions," said Neha Singh, co-founder, Tracxn.
The report highlights that Enterprise Applications, Fintech, and Transportation and Logistics Tech were the top-performing sectors in Q3 2023. Enterprise Applications funding rose by 51% compared to the previous quarter, Fintech received $436 million in funding, marking a 68% growth, and Transportation and Logistics Tech garnered $375 million, showing a drop of 72%.
It further stated, the investment growth in the fintech sector is propelled due to the rapid growth seen in the adoption of UPI both in the domestic market and international markets like Bhutan, France, UAE, Saudi Arabia, Bahrain, and Singapore. "Over 10B monthly UPI transactions were reported in August this year as per reports from NPCI and digital payments," said the report.
Moreover, the report reveals that Q3 2023 saw the creation of two unicorns, Zepto and Zyber 365, representing a 50% decline compared to the previous year. Also it added, there were 33 acquisitions during the quarter, a 13% decrease from Q3 2022.
Bengaluru emerged as the leader in total funds raised during Q3 2023, followed closely by Mumbai and Noida, reaffirming the significance of these tech hubs in India's startup landscape, it noted.