The total funding in H1 2023 ($5.5 billion) declined by 24 per cent compared to H2 2022 ($7.3 billion), and a staggering 72 per cent drop compared to H1 2022 ($19.7 billion). 

The number of funding rounds also experienced a substantial decrease in H1 2023 (536), with a drop of 43 per cent compared to H2 2022 (946) and 66 per cent compared to H1 2022 (1,586), according to Tracxn, a SaaS-based market intelligence platform.

“Despite India being one of the top-performing countries across the globe with respect to funding in the private sector, it is currently facing a deceleration in funding due to inflation and other macroeconomic factors,” said Neha Singh, Co-Founder, Tracxn.

Nevertheless, India still continues to be one of the fastest-growing economies. 

“India's startup ecosystem ranked third in terms of funding in 2022, and it moved up to second in Q1 2023, and there is a tremendous amount of growth potential,” she mentioned.

Late-stage rounds in H1 2023 witnessed a decline of 71 per cent, amounting to $3.8 billion, compared to H1 2022. 

Early-stage rounds secured $1.4 billion, reflecting a 44 per cent decline from H2 2022 and a significant 73 per cent drop from H1 2022. 

Seed-stage rounds faced a similar fate, with a 41 per cent drop from H2 2022 and a 71 per cent fall from H1 2022, securing only $315 million in funding. 

Despite these challenges, the first half of 2023 witnessed 14 funding rounds surpassing $100 million, marking a 17 per cent increase from H2 2022, said the report.

“The investment environment has seen a plunge in funding, but there is a revolution in Tier 2 and Tier 3 cities with an increased rate in the number of startups being formed, which is fuelling the country’s economic growth,” said Abhishek Goyal, Co-Founder, Tracxn.