Funding in female-founded startups drop 75% in 2023: Report

2021 was the highest funded year with $6.5B for women-led startups in a decade

As the ongoing winter funding persists in the Indian startup ecosystem, women-led firms have suffered significantly, witnessing a sharp drop of 75 percent in funding from $4.5 billion in 2022 to $1.1 billion in 2023, a report by Traxcn highlights.

The year 2021 was the highest funded year with $6.5 billion for women-led startups in a decade. The peak occurrence of women-led unicorns was also observed in 2021, with over 65 percent of these startup unicorns led by women emerging in the years 2021 and 2022.

Nonetheless, the trajectory seems to be promising in 2024 for women-led startups, which have already raised $100 million in funding in the first two months of 2024.

Overall, 2023 was the lowest funded year for the Indian startup ecosystem in the last five years, as the funding dropped 72 percent at $8.14 billion billion compared to $24.3 billion in the previous year.

8,000 women-led startups in India 

On a positive note, India is now home to more than 8,000 startups that have female founders, which have raised nearly $23 billion till date.

According to the Traxcn data, India tech startups have raised an impressive $155 billion in total funding, with women-led startups capturing 14.8 percent share of the overall tech funding pie.

Though a fraction, the share of women entrepreneurs' in the Indian tech industry now exceeds 18 percent, the report says.

Global share

Globally, the Indian tech startup ecosystem ranks second after the United States, in terms of funding raised by companies with women founders, the report stated further.

At $2.9 billion, 2020 witnessed the highest funding contribution from Indian women-led startups at nearly 17 percent, which dropped to 7.2 percent in 2023 with $1.1 billion funding.

Delhi tops the list 

Delhi-NCR took the lead in terms of the number of women-led startups, with over 2,370 firms formed to date, followed by Bengaluru and Mumbai. However, Bengaluru ranked first in terms of funding, with about $9.5 billion raised for women-led tech startups.

A similar report by Dealstreet Asia, terms “society’s expectations of women, conscious and unconscious biases, investor preference for male co-founders, and fewer women within the venture capital and private equity industry” are some of the key hindrances to the growth of female entrepreneurs.