Karnataka Faces Steep Drop in Startup Funds – Down 80% Due to World Issues

According to Karnataka Mid-Year Review of State Finances (2023-24) shared in the state legislature, startup funds in Karnataka have tumbled a massive 80%. The report says it went from $3.4 billion last year’s first half to a mere $0.6 billion this financial year, a gigantic $2.8 billion fall.

The report talks about investors being extra careful and worried about how much these startups are worth, mentioning a 70% cut in startup funds all over India. It says, “India’s startup world is struggling because investors are being super careful, and they’re worried about how much these startups are worth. So, the money going to startups in India went from $6.6 billion in the first part of last year to just $1.9 billion in the first part of this year.”

Bengaluru, the place famous for startups in India and where 40% of the country’s ‘unicorns’ live, is having a tough time because of this money problem. It’s making people in the Private Equity/Venture Capital business really worried. Also, the big money people from other countries are not so sure about giving money right now because of the world money situation and fights between countries.

The report says that less money from other countries is coming to India, especially in the services and computer software areas, dropping a big 23.9% in Foreign Direct Investment (FDI), which means companies from other countries investing in India.

The report says, “Karnataka is like the big computer city of India, and because of that, the money falling in these areas is making a big impact for the state.” Because the big countries are not doing so well, the money coming to Karnataka has dropped by 46%, going from $5.3 billion in the first part of last year to around $2.8 billion in the first part of this year.

This is mostly because startups are not getting as much money, and the big foreign companies are not putting as much money into the computer/software area.

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