Karnataka tech ecosystem funding falls 30% to $1.7 billion in H1 2025: Report

Karnataka-based companies raised a total of $1.7 billion in the first half of 2025, a 30% decline from $2.4 billion in the second half of 2024 and a 44% drop from $3 billion in the first half of 2024, according to Tracxn’s Karnataka Tech H1 2025 Funding Report.

The sharp decline shows subdued investor activity across several segments even as certain pockets of the ecosystem continued to show resilience.

Seed-stage funding totaled $141 million in the first half of 2025, down 39% from $233 million in the second half of 2024 and down 41% from $239 million a year earlier.

Early-stage rounds brought in $611 million, up 15% from $531 million in the previous half-year but 3% below the $630 million raised in the first half of 2024. Late-stage funding reached $930 million, down 44% from $1.6 billion in the second half of 2024 and 56% below the $2.1 billion raised in the first half of 2024.

Fintech, enterprise applications and retail emerged as the strongest sectors. Fintech companies raised $701 million in the first half of 2025, up 255% from $197 million in the second half of 2024 and up 57% from $446 million a year earlier. Enterprise applications drew $619 million, a 1% increase from $611 million in the second half of 2024 and 3% above the $604 million recorded in the first half of 2024.

Retail companies secured $542 million, up 27% from $428 million in the second half of 2024 but down 48% from $1 billion in the first half of 2024. The period saw two funding rounds exceeding $100 million, compared with four in the second half of 2024 and five in the first half of 2024.

Groww raised $202 million in a Series F funding round, and Jumbotail raised $120 million in a Series D round, both within sectors that continue to attract significant investor interest. Ather Energy was the only company to go public during the period. Two new unicorns emerged, compared with one in the previous half-year and three in the same period last year.

Tech firms in Karnataka recorded 26 acquisitions, a 4% drop from 27 in the previous half-year but a 24% increase from 21 in the first half of 2024. The largest deal was Groww’s $150 million acquisition of Fisdom, followed by ICRA’s $26 million purchase of Fintellix. Bengaluru-based companies accounted for the majority of funds raised across the state.

Among investors, Accel, AngelList and LetsVenture led overall activity. Antler, 100X.VC and Rainmatter dominated the seed stage, while Accel, Alteria Capital and Peak XV Partners were most active at the early stage. Premji Invest, SoftBank Vision Fund and Creaegis topped the late stage. Accel, based in the United States, led 34 investment rounds, while India-based Z47 added three companies to its portfolio.

Despite a slowdown in overall funding and fewer mega-rounds, Karnataka’s tech ecosystem demonstrated resilience in select sectors. Fintech and enterprise applications stood out, early-stage funding showed modest growth, and two new unicorns were created alongside several notable acquisitions.