Karnataka Tech Funding Dips 23% in Q1 2025

New Delhi, Apr 16 (PTI) Karnataka's tech startups garnered USD 633 million in funding during the January-March period of 2025, a 23 per cent decline from the previous quarter, according to a report.

The Karnataka Tech Quarterly Funding Report Q1 2025, released by Tracxn, revealed a contraction in funding activity compared to the previous quarter and the same period last year.

"A total of USD 633M was raised in Q1 2025, marking a 23 per cent decline compared to the USD 825.5M raised in Q4 2024 and a 46 per cent drop from the USD 1.20B raised in Q1 2024. This significant downturn highlights a widespread pullback in venture activity across the Karnataka tech ecosystem," the report, which was released on Wednesday, said.

According to the report, no new unicorns or funding rounds exceeding USD 100 million was recorded this quarter. Despite the overall downturn, sectors such as enterprise applications, fintech, and retail showed strong performance.

Seed-stage funding saw a decrease of 14 per cent to USD 57.3 million, while late-stage funding dropped significantly by 48 per cent to USD 282 million. Early-stage funding, however, experienced a 34 per cent increase, reaching USD 294 million.

Enterprise applications led the pack with USD 298.6 million in funding, followed by fintech at USD 221.1 million and retail at USD 219.8 million.

Merger and acquisition activity saw a surge, with 21 tech acquisitions recorded, a 91 per cent increase from the previous quarter. Amazon's USD 150 million acquisition of Axio was the highest-valued deal of the quarter.

Bengaluru, known as the startup hub of India, accounted for over 99 per cent of the total funding in the state. Accel, Blume Ventures, and Sequoia Capital emerged as the top investors in the Karnataka tech ecosystem.