India’s tech startups raise $4.1 billion to regain lost funding ground

India's technology startups witnessed an upward trend in funding during the first half (H1) of 2024 compared to the second half (H2) of 2023, according to the India Tech Semi-Annual Funding Report H1 2024 by Tracxn. Meanwhile, a report by Hurun India reveals 25 Indian startups have dropped out of the future unicorn index.

According to Tracxn’s report, India’s tech startups raised $4.1 billion in H1 2024, which marks a surge of 4 per cent compared to $3.96 billion raised in H2 2023. The upward trend in H1 2024 compared to H2 2023 happened after four half-year periods in a row that saw decline in funding since 2022. The report also noted a 13 per cent drop in H1 2024, in comparison to H1 2023 when Indian startups raised $4.8 billion.

Bengaluru startups led in terms of total funds raised in H1 2024, with Delhi at the second spot and Mumbai finishing third, Tracxn’s data showed.

The report shows seed-stage funding grew to $455 million in H1 2024, rising by 6.5 per cent from H2 2023 but falling by 17.3 per cent compared to H1 2023.

Early-stage startups maintained a funding rate consistent with H2 2023 at $1.3 billion, but the figure marks a dip of 28 per cent compared to H1 2023. Late-stage startups saw a 3.8 per cent hike compared to H2 2023 to reach $2.4 billion in H1 2024, but slumped 1.3 per cent drop compared to H1 2023.

In all, H1 2024 saw eight funding rounds crossing $100 million, featuring Flipkart ($350 million Series J round led by Google), Apollo 24|7 ($297 million private equity round) and Meesho ($275 million Series F round).

Overall, India slipped a spot to the fourth position in the list of countries with startups receiving maximum funds, while China moved up a position. Chinese tech startups raised $6.2 billion in H1 2024 and the country is now third in terms of funds raised. However, in India, 168 new startups received funding compared to 159 in China. Also, China’s total funding rounds were 327, lower than India’s 540 in the same period. The United States continues to be the number one nation in overall funding volume, while the United Kingdom is at the second spot.

The top performing sectors in H1 2024 were retail, enterprise application, and fintech. Retail funding touched $1.63 billion in H1 2024, jumping by 32 per cent compared to $1.23 billion in H1 2023. Funding in the enterprise application sector raised $933 million in H1 2024, which was 10 per cent less than the $1.04 billion amount that Indian startups raised in H1 2023. Fintech funding in H1 2024 was $726 million compared to $1.45 billion in H1 2023, registering a drop of 50 per cent.

Three unicorns emerged in H1 2024 compared to zero in H1 2023. A unicorn is a privately-owned startup valued at more than US$1 billion and not listed on a share market.

The number of initial public offerings rose to 17 in H1 2024, from 12 in H2 2023 and six in H1 2023. Biggest investors in Indian startups during H1 2024 were Accel, Blume Ventures and Peak XV Partners.

Meanwhile, a report by Hurun India shows there has been a substantial drop in the number of unicorns, primarily driven by overall funds crunch and stringent regulatory actions, and 25 startups have dropped out of the 2023 list. While the number of unicorns grew by three to 68 in 2022, the list saw a drop by one to 67 in 2023.

India has 67 unicorns right now, besides 46 gazelles and 106 cheetahs. Gazelles and cheetahs refer to startups that can become unicorns respectively in three and five years.