TLDR: Tech funding in Karnataka experienced a sharp 44% decline in the first half of 2025 compared to the same period last year, with total funding reaching $1.7 billion. This downturn reflects subdued investor activity across various segments, although Bengaluru continues to lead in funding, and sectors like FinTech, Enterprise Applications, and Retail show resilience.
Karnataka’s tech ecosystem has witnessed a substantial slowdown in funding during the first half of 2025, with a reported 44% drop compared to the corresponding period in the previous year. According to the ‘Karnataka Tech H1 2025 Funding Report’ by market research firm Tracxn, the state raised a total of $1.7 billion in H1 2025. This marks a 30% decrease from the $2.4 billion raised in H2 2024 and a significant 44% decline from the $3.0 billion secured in H1 2024. The report attributes this downturn to subdued investor activity across several segments.
Breaking down the funding stages, seed-stage funding saw a total of $141 million in H1 2025, representing a 39% drop from $233 million in H2 2024 and a 41% decrease from $239 million in H1 2024. Early-stage funding, however, showed healthier trends, increasing by 15% to $611 million in H1 2025 from $531 million in H2 2024. Conversely, late-stage funding experienced the steepest fall, plummeting 44% to $930 million in H1 2025 from $1.6 billion in H2 2024, and a 56% drop from $2.1 billion in H1 2024.
The first half of the year saw only two funding rounds exceeding $100 million, a stark contrast to five in H1 2024 and four in H2 2024. Despite the overall decline, the ecosystem still managed to produce two new unicorns and notable acquisitions, including Groww’s $150 million acquisition of Fisdom. Accel emerged as the most active investor during this period.
Bengaluru-based tech firms accounted for the majority of the funding raised across Karnataka. FinTech, Enterprise Applications, and Retail were identified as the top-performing sectors in H1 2025. FinTech and Enterprise Applications recorded increases of 57% and 3% respectively compared to the previous year, while Retail saw a 27% increase compared to H2 2024.
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In terms of acquisitions, tech companies in Karnataka saw 26 deals in H1 2025, a 4% drop from 27 in H2 2024 but a 24% rise compared to 21 in H1 2024. The state government is also actively promoting the tech sector, with recent approvals of over ₹400 crores for infrastructure, semiconductor, and tech developments, including a ₹75 crore ‘Beyond Bengaluru Cluster Seed Fund’ aimed at fostering startups in tier-2 and tier-3 cities, with a focus on areas like agritech, deep tech, artificial intelligence (AI), and manufacturing.
