The Indian startup sector has continued to face funding crunch. According to data compiled by global market intelligence platform Tracxn, the country slipped to fourth position among the highest-funded geographies in 2023, receiving only $7 billion in total funding till December 5, against third position in both 2021 and 2022. The third quarter performance is even worse─ fifth in the list─ while for the Q4 the figure stands at $957 million to date─ lowest since Q3 2016.

The report shows that only two unicorns─ Incred and Zepto─ were created this year, against a whopping 23 in the previous year. Also, the sector witnessed 36 percent drop in acquisition, from 187 in 2022 to 119 in 2023. It is also important to note that funding activities declined at all stages─ 73 percent in late funding, 70 percent in early-stage funding and 60 percent in seed funding. The retail sector funding fell 67 percent to $1.9 billion compared to 2022.

While these figures are not satisfactory, experts point out that favourable policies taken by the government and rapid growth of the economy will help the sector in the coming years. It is also a positive development that some sectors like environment-tech and space-tech are getting increasing attention from investors, with the former getting $1.2 billion in funding while the latter attracting $122 million in 2023.

As far as the space-tech sector is concerned, there is no doubt that its privatisation has changed the scenario. A group of experts has rightly pointed out that the private sector is increasingly getting involved in activities like research, manufacturing, and fabrication of rockets and satellites. They also viewed that the state-level incubation centres set up by the government is a big step toward pushing the country’s youth to entrepreneurship.