Karnataka Startup Funding Plunges

Regulatory uncertainty in the run-up to the Lok Sabha elections, coupled with rising inflation, geopolitical conflicts and disruption of supply chains, among other factors, fuelled startup funding volatility in India last year, with Karnataka among the hardest hit, according to startup funding tracker Tracxn.

- TDG NETWORK

Showing "signs of slight recovery", overall, the Indian startup ecosystem raised $11.6 billion in funding in the Calendar Year (CY) 2024, Tracxn said. This, it said, was a 5.4 percent increase from the $11 billion reported in 2023.

By comparison, according to Tracxn's Karnataka Tech Annual Report 2024, the startup hub raised $3.7 billion, registering a 24 percent decline in funds raised by seed, early and late-stage startups from 2023, when it raised $4.9 billion. It was also a staggering 68 percent fall in funding compared to the $11.7 billion raised in 2022.

Tracxn said that "various macroeconomic headwinds such as rising inflation, geopolitical conflicts, disruption of supply chains across industries, and changes in political leadership, among others have made the market conditions substantially volatile for investments".

Among domestic factors, it said, "post-election uncertainty in the regulatory front, and complicated taxation structures, among others," have impacted the startup ecosystem in India.

Despite this, Karnataka, along with Maharashtra and Haryana, was among the states with the top funding states in the Indian tech startup ecosystem.