Startup funding in India - statistics & facts
Indian startups received incessant funding from 2019, peaking in 2021 which turned out to be the year of unicorns, producing at least 44 unicorn startups. Over 127 thousand startups were recognized by the government as of 2024. The Indian startup ecosystem pointed the way to a positive future through innovation and digitalization.
Conventional sectors such as e-commerce, fintech, and enterprise tech continue to attract significant investor funding, dominating the market. However, certain technology segments have also caught investors’ attention. Despite a decrease in funding, the number of startups in the deep tech sector is increasing, largely due to advancements in artificial intelligence (AI). Deep tech employs technologies like AI, Blockchain, and IoT to tackle complex scientific or engineering problems. The primary risk associated with this sector is technical rather than market-based, allowing investors to recognize the societal value of these solutions and their potential return on investment. Additionally, electronic vehicles and space tech startups are also disrupting the market and gaining a significant share of funding.
Despite facing challenging times, startups in India continue to demonstrate remarkable resilience, adapting and innovating to thrive in the face of adversity.
Startup funding in emerging hubs and sectors
In 2023, Bengaluru, Delhi, and Mumbai continued to lead as the top startup hubs in the country, attracting the highest number of deals. However, there was a noticeable shift as investors began to see the potential in Tier-II and Tier-III cities. These cities, with their untapped talent, lower operational costs, expanding consumer markets, and improved connectivity, are well-positioned to boost the growing startup ecosystem. Despite the advantages that startups in Tier-II and Tier-III cities hold over those in Tier-I cities, they face unique challenges. These include an unstructured business environment, a lack of an entrepreneurial community, limited availability of incubator and coworking spaces, and fewer networking opportunities. Development and Growth.Conventional sectors such as e-commerce, fintech, and enterprise tech continue to attract significant investor funding, dominating the market. However, certain technology segments have also caught investors’ attention. Despite a decrease in funding, the number of startups in the deep tech sector is increasing, largely due to advancements in artificial intelligence (AI). Deep tech employs technologies like AI, Blockchain, and IoT to tackle complex scientific or engineering problems. The primary risk associated with this sector is technical rather than market-based, allowing investors to recognize the societal value of these solutions and their potential return on investment. Additionally, electronic vehicles and space tech startups are also disrupting the market and gaining a significant share of funding.
Navigating the funding winter: Adapting to tighter capital access
In 2024, startups continue to experience a funding crunch, with a noticeable decrease in both the number of deals and the size of those deals. This situation has affected the growth of the startup ecosystem, although it remains comparable to other global ecosystems. The cautious approach to venture capital (VC) funding reflects a worldwide trend of risk aversion. High interest rates, driven by inflation, have made capital access more challenging for founders. As private equity/venture capital, and angel investor funding become less available, founders are increasingly exploring alternative funding avenues such as crowdfunding, accelerator or incubator programs, and government funding schemes such as Startup India Seed Fund Scheme and Startup Accelerator of MeitY for Product Innovation, Development and Growth.Despite facing challenging times, startups in India continue to demonstrate remarkable resilience, adapting and innovating to thrive in the face of adversity.
