Indian start-ups raise more funds than China for 2nd straight year
India ahead of China in terms of start-up funding for the second consecutive year during the first half (H1) of 2023, raising $5.5 billion. India ranked third by geography after the United States and the United Kingdom, raising $67.4 billion and $8.6 billion respectively, according to data from market intelligence platform Tracxn.
China took fourth place for the second year in a row, raising just $4.6 billion in the first half. The last time China was ahead of India in the first half of the year was in the first half of 2021, when it ranked second after the United States, while India ranked fourth.
Regardless, funding among Indian startups fell 72 percent year-on-year in the first half of 2023, compared to $19.7 billion in the same period last year. On a semi-annual basis, funding is down 24 percent from $7.3 billion in the second half of 2022, according to Tracxn.
“Despite India being one of the best performers worldwide in terms of private sector financing, it is currently facing a slowdown in financing due to inflation and other macroeconomic factors,” said Neha Singh, Founding Partner of Tracxn.
However, India remains one of the fastest growing economies. The startup ecosystem in India ranked third in terms of funding in 2022, rose to number two in Q1 2023, and there is a huge amount of growth potential.”
No new unicorns were created during the first six months of the year, compared to 19 in the first half of 2022 and six in the second half of 2022.
“The lack of unicorns in the first half of the year is disheartening, but adding 60 companies to the (soon-to-be) Soniccorn club and financing 212 companies for the first time represents a space aspect amid global headwinds,” said Abhishek Goyal, co-founder of Tracxn.
Despite these challenges, the first half of 2023 saw 14 funding rounds exceeding $100 million, an increase of 17 percent over the second half of 2022.
Goyal added that there has also been a revolution in tier 2 and 3 cities with an increasing rate of start-ups being formed, which, he says, is fueling the country’s economic growth. This is largely due to the increasing adoption of online payment platforms and the expansion of the Internet.