Karnataka tech ecosystem sees funding drop, Bengaluru fares better: Report

The Karnataka tech ecosystem saw a noticeable funding slowdown in the first half of 2025, witnessing a sharp drop of 44% compared to the corresponding period in the previous year, shows the newly released Karnataka Tech H1 2025 Funding Reportby market research firm Tracxn.

“A total of $1.7 billion was raised in Karnataka in H1 2025, marking a significant decrease of 30% compared to $2.4 billion raised in H2 2024, and a drop of 44% compared to $3.0 billion raised in H1 2024. This decline reflects subdued investor activity across several segments when compared to prior periods,” noted the report.

Sharp drops

Seed stage saw a total funding of $141 million in H1 2025, a drop of 39% compared to $233 million raised in H2 2024, and a drop of 41% compared to $239 million raised in H1 2024. 

Early-stage funding showed healthier trends with total funding of $611 million in H1 2025, going up by 15% from $531 million raised in H2 2024.

Late-stage funding witnessed the steepest fall. The funding amount stood at $930 million in H1 2025, a drop of 44% compared to $1.6 billion raised in H2 2024, and a drop of 56% compared to $2.1 nillion raised in H1 2024.

Top performers

Bengaluru-based tech firms accounted for the majority of the funding raised by tech companies across Karnataka.

FinTech, Enterprise Applications, and Retail were the top-performing sectors in H1 2025. While Fintech and Enterprise Applications recorded an increase of 57% and 3% respectively compared to the corresponding period in the previous year, Retail saw an increase of 27% compared to H2 2024.

The first half of the year witnessed two $100 million+ funds as opposed to five in H1 2024 and four in H2 2024.

Tech companies in Karnataka saw 26 acquisitions in H1 2025, a drop of 4% compared to 27 in H2 2024, and a rise of 24% compared to 21 in H1 2024.

Accel emerged as the most active investor. Despite fewer mega-rounds and only one IPO, the ecosystem still witnessed the creation of two new unicorns and notable acquisitions led by Groww.