Funding declines for early-stage rounds in India in Q1 of 2023: Tracxn report

What’s the news: Early-stage rounds of funding in India in Q1 of 2023 saw a decline of 68 percent compared to Q1 of 2022, as per the ‘Tracxn Geo Quarterly Report: India Tech – Q1 2023.’ According to the report, early-stage rounds in Q1 of 2023 saw funding of $844 million, but it seems like the decline began a few quarters ago, given that the drop is just 4 percent compared to Q4 of 2022. What about late-stage funding? Tracxn reported that late-stage rounds in Q1 of 2023 saw funding of $1.8 billion, meaning a decline of 79 percent compared to Q1 of 2022 and a 23 percent drop compared to Q4 of 2022. However, the month-on-month funding in the ‘IndiaTech Startup Ecosystem’ increased by 54 percent from $777 million in February 2023 to $1.2 billion in March 2023. What's surprising: When there’s a downturn in funding, a larger impact is typically felt by late stage rounds that involve higher amounts of funding. On the other hand, early-stage funding deals are smaller investments, and should typically be impacted less. In this case, there's not much of a difference between the two. It's thus surprising that early stage deals have been impacted this much: it means fewer startups will be created or will survive, in the absence of deployments by early stage investors. Unexpected impact of declined funding in India: As per the report, “companies across the globe are now resorting to layoffs to preserve cash”. By Q1 of 2023, India…