No unicorns were created in Q1FY25 and Q4FY24, compared to two unicorns in Q1FY24.
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Karnataka’s tech start-up ecosystem hit a funding slump in Q1FY25, raising $633 million—a sharp 23 per cent drop from the previous quarter and 46 per cent decline on-year, according to Tracxn’s latest report. Despite the downturn, sectors like enterprise applications, fintech, and retail emerged as bright spots, collectively attracting the bulk of investor interest.
Seed stage received funding of $57.3 million in Q1FY25, or a 14 per cent drop compared to $66.6 million raised in Q4FY24 and a further 5 per cent decline against $128 million raised in Q1FY24. Early stage funding touched $294 million in Q1FY25, or a 34 per cent increase compared to $220 million raised in Q4FY24, and a 14 per cent drop compared to $344 million raised in Q1FY24. Late stage saw a total funding of $282 million in Q1FY25 – a drop of 48 per cent – compared to $539 million raised in Q4FY24, and a drop of 60 per cent compared to $707 million raised in Q1FY24. Overall, Karnataka saw no over 100 million rounds in Q1 2025.
Top performers
Enterprise applications sector received $298.6 million in funding in the first quarter of FY25, or an increase of 80 per cent compared to $166 million raised in Q4FY24 and a drop of 18 per cent against $362.3 million raised in Q1FY24.
The fintech sector garnered a total funding of $221.1 million in Q1FY25, which is a 271 per cent increase compared to $59.7 million raised in Q4FY24 and a 28 per cent drop against $309.2 million raised in Q1FY24.
The retail sector raised $219.8 million in funding in Q1FY25, an 80 per cent increase from $122 million in Q4FY24 and a 12 per cent drop when compared to $249.4 million raised in Q1FY24.
The report also noted that no companies went public in Q1FY25. No unicorns were created in Q1FY25 and Q4FY24, compared to two unicorns in Q1FY24.
21 acquisitions
Within the tech ecosystem, the State witnessed 21 acquisitions in Q1FY25, a 91 per cent increase from 11 acquisitions in Q1 and Q4 of FY24. The highest-valued acquisition was that of Axio by Amazon for $150 million followed by the acquisition of Digiledge by Mintoak for $3.50 million. Accel, Blume Ventures and Sequoia Capital were the leading tech investors, with 100X.VC, Venture Catalysts and Antler as the top seed stage investors for Q1FY25.
Among venture capital (VC) firms, Accel made the highest number of investments with 16 rounds.
In terms of the downturn and total funding decline, the report stated, “Bengaluru remained the dominant tech hub, drawing nearly all of the funding in the State. While seed and late-stage funding declined, early-stage investments showed resilience, supported by strong participation from both domestic and international investors.”
(With inputs from businessline intern Nethra Sailesh)
Published on April 16, 2025
