Karnataka tech ecosystem funding drops 40% to $2.7 billion in 9M 2025, Tracxn report says

Karnataka tech ecosystem has raised a total of $2.7 billion in the first nine months of 2025, representing a 40% drop compared to $4.5 billion in the first nine months of 2024, and a 23% decline compared to $3.5 billion raised in the same period during 2023, according to a latest report released by Tracxn. 

The report outlines funding activity, sector performance, IPOs, acquisitions, and investor participation across the state.

Karnataka’s tech landscape saw shifts in investment sentiment during the period, reflecting fluctuations across deal sizes, stages, and sector-wise participation.

Bengaluru-based tech firms contributed nearly all of the funding raised by tech companies across Karnataka. Seed-stage funding stood at $287 million, representing a 22% decline from $366 million in the first nine months of 2024 and a 21% decrease from $361 million in the first nine months of 2023, while maintaining consistent early-stage momentum in the ecosystem.

Early-stage investment showed strong progress, reaching $1.1 billion, a 20% increase compared to $914 million in the first nine months of 2024 and a 26% rise from $871 million in the same period of 2023.

Late-stage funding totaled $1.3 billion, reflecting a 59% decrease from $3.2 billion in the first nine months of 2024 and a 41% decline compared to $2.2 billion in the first nine months of 2023.

FinTech, Enterprise Applications, and Retail were the top-performing sectors in Karnataka during the first nine months of 2025. The fintech sector recorded $841 million in funding, an increase of 38% compared to $608 million in the first nine months of 2024, but a decrease of 21% compared to $1.1 billion in the first nine months of 2023.

The Enterprise Applications sector saw $830 million in the first nine months of 2025, representing a 19% decrease from $1 billion in the first nine months of 2024, and a 26% decline compared to $1.1 billion in the first nine months of 2023.

The Retail sector recorded $730 million in the first nine months of 2025, a 43% drop from $1.3 billion in the first nine months of 2024, but a 10% increase compared to $663 million raised in the first nine months of 2023.

The first nine months of 2025 registered two funding rounds above $100 million, compared to eight such rounds in the first nine months of 2024 and seven in the first nine months of 2023. Companies like Groww and Jumbotail raised more than $100 million during this period. Groww secured $202 million in a Series F round, while Jumbotail raised $120 million in a Series D round. 

Karnataka’s tech ecosystem saw 2 IPOs in the first nine months of 2025, a 67% drop from 6 in the first nine months of 2024, compared to none in the first nine months of 2023. Ather Energy and BlueStone were the companies that went public during this period.

In the first nine months of 2025, 3 new unicorns emerged, representing a 40% drop from 5 in the first nine months of 2024, and a 200% rise compared to 1 in the first nine months of 2023.

Tech companies in Karnataka saw 35 acquisitions in the first nine months of 2025, a 5% drop compared to 37 in the first nine months of 2024, but a 13% increase compared to 31 in the first nine months of 2023. The highest-valued acquisition was Groww acquiring Fisdom for $150 million, followed by ICRA acquiring Fintellix for $26 million.

Bengaluru-based tech firms accounted for nearly all of the funding raised by tech companies across Karnataka in the first nine months of 2025, positioning the city as the state’s dominant hub for startup investments.

Investor participation in Karnataka’s tech ecosystem remained active across stages in the first nine months of 2025. Venture Catalysts, Antler, and Rainmatter emerged as the most active investors at the seed stage, supporting early-stage companies across the state.

At the early stage, Accel, Peak XV Partners, and Elevation Capital played key roles in driving scale-up investments.

At the mature end of the market, Sofina, Softbank Vision Fund, and Mars Growth Capital led late-stage investment activity in the Karnataka tech ecosystem during the period.