Funding in Karnataka, Gujarat, and Tamil Nadu tech startups plummet in 2023: Report

Funding in tech startups of Karnataka, Gujarat, and Tamil Nadu dropped in 2023 as per a data intelligence platform.

Tracxn Geo Annual Report revealed that Karnataka Tech startup ecosystem saw a total funding of $3.4 billion in 2023, which is a 72% plunge from the $12.2 billion raised in 2022.

On the other hand, funding in Gujarat-based tech startups fell 66% to $139 million in 2023 from $412 million in the previous year.

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Tamil Nadu startups also saw a crunch in funding, with an 85% plunge last year. Tamil Nadu-based tech startups secured a total funding of $255 million in 2023 as against $1.7 billion raised in 2022.

Karnataka's tech startups attracted late-stage investments worth $2.3 billion in 2023, a 74% decline compared with $8.9 billion in 2022.

Only eight $100 million plus funding rounds were observed in this space in 2023, as against 26 and 44 such rounds in 2022 and 2021, respectively.

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As per the Tracxn report, fintech, retail, and enterprise applications were the top-funded segments in Karnataka-based startups last year.

The FinTech sector in Karnataka secured a total funding of $1.15 billion in 2023, a decline of 51% compared with $2.4 billion raised during the previous year. The Retail sector witnessed total funding of $956 million while startups in the Enterprise Applications sector attracted investments worth $928 million in 2023.

Bengaluru took the lead in terms of city-wise funding in 2023. Startups based in Bangalore raised $3.4 billion in 2023, while those based in Hubli raised $121,000.

Accel, Wellfound, and LetsVenture have been the top investors in the state to data, the report said.

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In Gujarat, Vadodara took the lead in startup funding by raising $65 million in 2023 while Surat and Ahmedabad-based startups raised $41 million and $33 million respectively.

Whereas, Chennai was the highest-funded city in Tamil Nadu, accounting for 97% of the total funds raised by tech startups in the southern state. Chennai raised $247 million in 2023, followed by those based in Coimbatore ($6 million) and Ranipet ($2 million).

Only one $100 million + funding round was seen in the Tamil Nadu tech startup ecosystem in 2023. TI Clean Mobility, a manufacturer of electric three-wheelers, raised $145 million in its Series D funding round.

RTBI, The Chennai Angels, and Chiratae Ventures have been the most active investors in Tamil Nadu to date.