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25. July 2025
Bengaluru Tech Funding Plummets 44 As Karnataka Sees Record Low Investments
The Karnataka tech funding landscape has experienced a significant downturn, with a total of $1.7 billion in investments secured during the first half of 2025, marking a 44% decline compared to the same period last year and a 30% drop from the previous year’s second half.
This data was revealed by Tracxn’s recent Karnataka Tech H1 2025 Funding Report, which provides an in-depth analysis of the state’s tech ecosystem. Despite this decline, Bengaluru continued to be the hub of tech investment within the state, underscoring its position as a major player in India’s startup scene.
The report attributes the decline to subdued investor activity across several segments compared to prior periods. However, some verticals, such as fintech and enterprise applications, have shown remarkable resilience. These sectors have emerged as key growth areas for Karnataka-based startups, with fintech seeing a significant increase in funding to $701 million in H1 2025.
Fintech companies have been at the forefront of this surge, with numerous startups securing substantial investments. One notable example is Groww, which raised a total of $202 million in its Series F round. Jumbotail also secured significant funding, raising $120 million in its Series D round. These investments demonstrate the growing interest in fintech solutions among investors and consumers alike.
On the other hand, the late-stage funding segment has seen a substantial decline, with only $930 million invested during H1 2025 compared to $1.6 billion in the previous year’s second half. This suggests that many startups are struggling to secure the necessary capital for growth and expansion.
The creation of new unicorns is another telling indicator of the state’s tech ecosystem. In H1 2025, two unicorns were created, a significant increase compared to the one unicorn created in the previous year. The rise of these new unicorns highlights the potential for Karnataka-based startups to achieve significant growth and success.
Acquisitions also played a crucial role in shaping the tech landscape during this period. Tech companies in Karnataka saw 26 acquisitions in H1 2025, a decline compared to the previous year but still indicative of the ongoing activity in the sector. Notable acquisitions include Fisdom’s acquisition by Groww at a price of $150 million and Fintellix’s acquisition by ICRA at a price of $26 million.
Bengaluru-based tech firms have dominated the funding landscape, with Accel, Angel List, and LetsVenture emerging as top investors in the Karnataka Tech ecosystem. These investors have played a pivotal role in shaping the state’s startup ecosystem, providing critical support to numerous startups.
The presence of international investors highlights the global nature of Karnataka’s tech ecosystem and the opportunities it presents for startups looking to expand their reach. United States-based VC firm Accel led the most number of investments in H1 2025, securing 34 rounds, while India-based fund Z47 added three new companies to its portfolio.
The decline in funding is attributed to a combination of factors, including increased competition from other startup ecosystems and the ongoing impact of the pandemic on the overall startup landscape. However, despite these challenges, Karnataka remains an attractive destination for investors and startups alike due to its thriving ecosystem and favorable business environment.
Fintech and enterprise applications have emerged as key growth areas for Karnataka-based startups. These sectors are expected to continue driving innovation and disruption in the state’s tech ecosystem. The data from Tracxn’s report provides a valuable snapshot of the Karnataka tech funding landscape during H1 2025, highlighting both the challenges and opportunities that lie ahead for the state’s startup ecosystem.
Mentorship, networking, and collaboration are essential components of driving growth and success within the Karnataka tech ecosystem. The presence of top-notch investors, incubators, and accelerators has created a supportive environment that fosters innovation and entrepreneurship.
The recent surge in acquisitions underscores the growing value proposition of Karnataka-based startups. These transactions not only demonstrate the potential for startups to achieve significant growth but also highlight the importance of strategic partnerships and collaborations in driving success.
In the coming months, it will be essential for investors and startups to stay adaptable and focused on delivering innovative solutions that address pressing industry needs. The Karnataka tech funding landscape is likely to continue evolving, with new trends and opportunities emerging as the ecosystem continues to mature.
The data from Tracxn’s report serves as a valuable resource for stakeholders, providing insights into the strengths and challenges of the Karnataka tech ecosystem. By understanding these dynamics, investors and startups can make informed decisions about where to allocate resources and how to drive growth and success in the state’s thriving startup community.