Photo for representational purpose,
Credit: iStock photo
Bengaluru: Tech startups in Karnataka have raised only $2.7 billion from January to September 2025 (9M 2025), a 40% decline from $4.5 billion they raised in 9M 2024 and a 23% drop from $3.5 billion in 9M 2023.
According to a report released by market intelligence firm Tracxn, the nine-month period witnessed a noticeable slowdown in large-ticket rounds, impacting overall capital flow into the ecosystem.
However, early-stage investment reached $1.1 billion, a 20% increase compared to $914 million in 9M 2024 and a 26% rise from $871 million in 9M 2023. This shows growing investor confidence in emerging startups.
While seed-stage funding stood at $287 million, a 22% decline from $366 million in 9M 2024 and a 21% decrease from $361 million in 9M 2023, late-stage funding stood at $1.3 billion, a 59% decrease from $3.2 billion in 9M 2024 and a 41% decline compared to $2.2 billion in 9M 2023.
FinTech, Enterprise Applications, and Retail were the top-performing sectors in Karnataka during 9M 2025. The FinTech sector recorded $841 million in funding, an increase of 38% compared to $608 million in 9M 2024, but a decrease of 21% compared to $1.1 billion in 9M 2023. Enterprise Applications saw $830 million funding in 9M 2025, a 19% decrease from $1.0 billion in 9M 2024, and a 26% decline compared to $1.1 billion in 9M 2023. The retail sector recorded $730 million in 9M 2025, a 43% drop from $1.3 billion in 9M 2024, but a 10% increase compared to $663 million raised in 9M 2023.
"Karnataka’s funding dip this year is largely the result of a sharp slowdown in late-stage capital, not a slowdown in innovation," Serial Entrepreneur, Founder and CEO of Assiduus Global, Somdutta Singh, said.
The state saw a 59% drop in late-stage funding and far fewer 100-million-dollar rounds, which was just two this year compared to eight, last year.
"At the same time, early-stage funding actually grew 20% year-on-year, signalling that founders are still building and younger companies continue to attract strong investor confidence. What we are witnessing is a reset in large cheques, as investors prioritise profitability, governance, and sustainable business models," she said.
As we head into 2026, capital will likely become more selective, but also more focused on deep tech, AI, enterprise applications, and infrastructure-led companies. However, this dip masks the fact that the quality and direction of Karnataka’s startup ecosystem remain strong and forward-looking, Singh added.