<p>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.</p>.<p>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. </p><p>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.</p>.Karnataka govt and VCs distribute Rs 400 crore to deep tech startups.<p>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.</p>.<p>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.</p>.<p>"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.</p>.<p>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.</p>.<p>"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.</p>.<p>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.</p>
<p>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.</p>.<p>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. </p><p>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.</p>.Karnataka govt and VCs distribute Rs 400 crore to deep tech startups.<p>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.</p>.<p>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.</p>.<p>"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.</p>.<p>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.</p>.<p>"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.</p>.<p>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.</p>