No Unicorns, No IPOs: Karnataka Start-Ups See 'Funding Crunch' in Q1 2025 | Check Details Here

Karnataka secured $633 million in funding in Q1 2025, marking a 23% decline compared to the $825.5 million raised in the previous quarter. The current funding amount is also 46% down from the $1.20 billion raised in Q1 2024. This trend highlights a widespread pullback in venture activity across the Karnataka tech ecosystem.

As per Tracxn data, seed stage saw a total funding of $57.3 million in Q1 2025, a drop of 14% compared to $66.6 million rose in Q4 2024, and a drop of 55% compared to $128 million raised in Q1 2024. And the early stage saw a total funding of $294 million in Q1 2025, an increase of 34% compared to $220 million rose in Q4 2024, and a drop of 14% compared to $344 million raised in Q1 2024. 

The late stage witnessed a total funding of $282 million in Q1 2025, a drop of 48% compared to $539 million raised in Q4 2024, and a drop of 60% compared to $707 million raised in Q1 2024, the data revealed. Regarding sectoral funding, enterprise applications, fintech, and retail were the top-performing sectors in Q1 2025.

During the same period, there were no unicorns created in Q1 2025 and Q4 2024, compared to two unicorns in Q1 2024. No companies went public in Q1 2025.

Tech companies in Karnataka saw 21 acquisitions in Q1 2025, which is a 91% increase as compared to 11 acquisitions in Q1 and Q4 2024. For instance, Axio was acquired by Amazon at a price of $150 million. This became the highest valued acquisition in Q1 2025 followed by the acquisition of Digiledge by Mintoak at a price of $3.50 million.

Accel, Blume Ventures, and Sequoia Capital were the overall top investors in the Karnataka tech ecosystem. 100X.VC, Venture Catalysts, and Antler led seed-stage investments during Q1 2025, while Accel, Alteria Capital, and Peak XV Partners were the most active in early-stage deals.

At the late stage, Think Investments, M&G, and Mars Growth Capital emerged as the top investors. Among VCs, United States-based Accel led the most number of investments in Q1 2025 with 16 rounds. Late-stage VC investments saw United States-based Think Investments and United Kingdom-based M&G add 1 company each to their portfolios.