India beats China and Germany in tech startup funding this year, sees 6% growth to $11.3 billion: Report

This year, India's tech startups received $11.3 billion funding, an increase of six per cent from $10.7 billion in 2023, according to a report by SaaS-based market intelligence platform Tracxn on Thursday (December 19). India placed third in funding, after the United States (US) and the United Kingdom (UK), but ahead of China and Germany.

In the first half of the calendar year 2024, India tech received $5.32 billion across 540 funding rounds, a growth of 8 per cent from H2 2023 where $4.92 billion was raised across 890 rounds, but 22 per cent lower than the $6.81 billion raised from 1,210 rounds in H2 2022. The data indicates a shift towards fewer, larger funding rounds, signaling to change investor priorities.

A look at Q4 2024 funding

In the fourth quarter of 2024 (till date), $1.8 billion in funding has been raised across 219 rounds, as per the Tracxn report. This represents a 47.5 per cent drop from $3.5 billion in Q3 2024 and a 33.3 per cent decrease compared to $2.7billion in Q4 2023.

Total acquisitions

This year, 113 acquisition deals were recorded, representing a 19.3 per cent decline from 140 acquisitions in 2023 and a 41.1 per cent drop from 192 acquisitions in 2022. 

Meanwhile, iBUS was acquired by NIIF for $200 million, becoming the highest-valued acquisition in 2024 followed by the acquisition of Loyal Hospitality by Finnest for $160 million.

Top VC investors

Startups saw strong backing from venture capital (VC) firms like Accel, Blume Ventures, and Peak XV Partners which also emerged as the top investors in 2024. In the seed stage, Venture Catalysts, Z Nation Lab, and Blume Ventures led the way as the top investors, while Accel, Peak XV Partners and Elevation Capital dominated the early stage and SoftBank Vision Fund, Creaegis and Avataar Ventures emerged as the most active in the late stage. 

Bengaluru-based startups recorded most funding

Talking about city-wise funding in startups, Bengaluru-based tech firms accounted for 30.28 per cent of all funding seen by tech companies across India. This was followed by Mumbai at a close second at 27.07 per cent.

Top-performing sectors in 2024

Top-performing sectors were the gig economy, retail, and enterprise applications. The Gig Economy received $2.2 billion in funding, up 414 per cent from $420 million in 2023, demonstrating its tremendous expansion and investor trust. 

Retail, on the other hand, received $2.6 billion, a 13 per cent decrease from $3 billion in 2023, signalling market recalibration. Enterprise applications received $2.2 billion in funding, down 11 per cent from $2.5 billion in 2023, suggesting strategic investment adjustments.

"Quick commerce emerged as a high-growth sector, with 40 active companies, including Zepto (Unicorn), Dunzo (Soonicorn), and Swish and Farmako (Minicorns). In YTD 2024, the sector raised $1.37 billion in equity funding from 7 rounds, driven largely by Zepto, which secured $1.355 billion across three $300 million rounds. Key investors included Goodwater Capital, StepStone Group, and Lightspeed Venture Partners," the report said.

"India Tech saw 37 IPOs in 2024, a significant 76.19% increase over 21 IPOs in 2023 and 94.74% higher than 19 IPOs in 2022. Major IPOs included Swiggy, Niva Bupa, BlackBuck, and C2C Advanced Systems," it added.