Start-up funding sees slowdown in Q1 2024 after three quarters of growth: Tracxn

The funding in the Indian start-up sector saw a slowdown in Q1 2024 (until March 15), with $1.6 billion raised after continuous growth in the previous three quarters of 2023, according to a report by market intelligence platform Tracxn.

The VC funding had risen from 1.6 billion in Q2 2023 to $1.9 billion in Q3 2023 and $2.2 billion in Q4 2023. It is to be noted that despite investment numbers being lower compared with the same period in 2021 and 2022, India has secured the fourth-highest position globally in terms of funding raised during this period, reflecting the resilience of its entrepreneurial landscape.

Despite challenges, early-stage funding witnessed a notable increase of 28 per cent, while late stage funding experienced a significant drop of over 46 per cent.

• Also read: Indian start-up ecosystem to play a key role in making India third-largest economy: PM Modi

The report noted that retail, fintech, and enterprise applications are the top-performing sectors in Q1 (until March 15) 2024. The retail sector received funding of $494 million, which marks decline of 34 per cent compared with the previous quarter, while enterprise applications garnered $448 million, up by 48 per cent while fintech received $429 million in funding, a 48 per cent growth from the last quarter’s $289 million.

Out of $1.6 billion in funding, Shadowfax and Credit Saison received the highest funding of over $100 million, with Capillary, Rentomojo, and Captain Fresh also being among the top funded companies. The quarter saw the emergence of two new unicorns—Perfios and Ola Krutrim.

Additionally, IPO numbers surged, with eight tech companies going public, including MediaAssist, WTI, Exicom, and LawSikho, reflecting investor confidence in the sector.

• Also read: Start-ups urged to prioritise corporate governance

Overall, there were 20 acquisitions during the quarter, a 33 per cent decline from last quarter and a 55 per cent drop compared to 45 acquisitions in Q1 2023. Notable acquisitions included Pingsafe, a cloud security platform, which was acquired by SentinelOne, and Difenz, a fraud risk management platform, being acquired by Signzy.

Venture Catalysts, We Founder Circle and Titan Capital led the seed investments in Q1 2024, while Peak XV Partners, Saama Capital, and RTP Global were prominent in early-stage investments. Elev8, Epiq Capital Advisors, and UC-RNT Fund took the lead in the late-stage category this quarter.

Bengaluru emerged as the leader in total funds raised during Q1 , followed closely by Mumbai and Noida, reaffirming the significance of these tech hubs in India’s start-up landscape.

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