Karnataka startups funding drops 23% in Q1 2025

Bengaluru-based tech firms accounted for more than 99% of all funding seen by tech companies across Karnataka. This was followed by Hubballi at a distant second.
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Data from market research firm Tracxn Technologies showed that Karnataka startups raised $633 million in the first quarter of 2025, down 23% from the $825.5 million raised in the last quarter of 2024.

Tracxn’s Q1 2025 Karnataka Tech Funding Report also revealed a substantial contraction in year-on-year funding activity. The quarter recorded a 46% drop from the $1.20 billion raised in Q1 2024. The State saw no new unicorns or funding rounds above $100 million this quarter. According to the report, the significant downturn indicated a widespread pullback in venture activity across the Karnataka tech ecosystem.

Steep fall across stages

Bengaluru-based tech firms accounted for more than 99% of all funding seen by tech companies across Karnataka. This was followed by Hubballi at a distant second.

Seed stage startups saw a total funding of $57.3 million in Q1 2025, a drop of 14% compared to $66.6 million raised in Q4 2024, and a drop of 55% compared to $128 million raised in Q1 2024.

Early-stage startups fared better and saw an increase of 34% with a total funding of $294 million in Q1 2025 compared to $220 million raised in Q4 2024. However, year-on-year data showed a decline of 14%.

Late-stage startups, too, witnessed a total funding drop of 48% compared to Q4 2024, and a 60% drop compared to Q1 2024.

Top-performers

According to the report, enterprise applications, fintech, and retail were the top-performing sectors in Q1 2025 in terms of funding. No companies went public in the quarter.

Tech companies in Karnataka saw 21 acquisitions in Q1 2025, which is a 91% increase compared to 11 acquisitions in Q1 and Q4 2024. Axio was acquired by Amazon at $150 million, making it the highest valued acquisition in Q1 2025. This was followed by the acquisition of Digiledge by Mintoak at a price of $3.50 million.

Accel, Blume Ventures, and Sequoia Capital were the overall top investors in the Karnataka tech ecosystem.