India’s startup ecosystem, one of the largest globally, continues to demonstrate resilience and adaptability in the first half of 2025 (H1 2025). Despite global economic uncertainties, Indian startups have shown a remarkable recovery from the funding winter of previous years, raising approximately $5.7 billion across 916 equity funding rounds, according to industry reports. This marks an 8% increase from the $5.3 billion raised in H1 2024, signaling a cautious but optimistic rebound in investor confidence. This report delves into the key trends, sectoral shifts, regional dynamics, and future outlook for India’s startup funding landscape in H1 2025.
A Resilient Recovery Amid Global Challenges
The Indian startup ecosystem faced significant challenges in 2023 and 2024, with funding dropping to a seven-year low of $10 billion in 2023 due to global macroeconomic pressures, high interest rates, and geopolitical uncertainties. However, H1 2025 has shown signs of stabilization, with funding levels approaching those of 2020, a period of relative balance before the funding boom of 2021–2022. The $5.7 billion raised in H1 2025 reflects a 35.25% drop compared to the $12 billion raised in H1 2024, but the number of deals (916) indicates sustained investor interest, particularly in growth-stage and early-stage ventures.
The recovery is attributed to a shift in investor priorities toward sustainable business models, profitability, and scalable innovation. Unlike the growth-at-all-costs mentality of 2021, investors in 2025 are focusing on startups with strong unit economics and clear paths to profitability. This shift has fostered a more disciplined funding environment, with an emphasis on quality over quantity in deal-making.
Sectoral Shifts: Fintech, AI, and Climate Tech Lead the Way
The funding landscape in H1 2025 reflects a maturing ecosystem with diverse sectoral investments. Key sectors driving funding include:
1. Fintech: The Funding Powerhouse
Fintech continues to dominate, securing $1.6 billion across 68 deals, a 56% increase from H1 2024. The sector’s resilience is driven by India’s robust digital infrastructure, including the Unified Payments Interface (UPI), and growing demand for financial inclusion solutions. Notable deals include Infinity Fincorp’s $70 million infusion, which underscores investor confidence in scalable fintech models. Startups focusing on lending, payments, and wealth management platforms, such as Multipl’s partnership with FundsIndia, are attracting significant capital due to their ability to serve underserved markets.
2. Artificial Intelligence (AI): The Rising Star
AI startups have emerged as a key focus, raising $355.68 million in H1 2025, with Bengaluru-based firms like Impetus Technologies ($350 million) and Innovaccer ($275 million) leading the charge. The 39.9% year-on-year increase in AI funding highlights growing investor confidence in AI-driven solutions across healthcare, analytics, and SaaS platforms. The launch of India’s largest H200 GPU cluster by E2E Networks reflects the push for AI infrastructure tailored to Indian startups and researchers.
3. Climate Tech and Electric Vehicles (EV): Sustainability in Focus
Climate tech and EV startups are gaining traction, fueled by India’s push for green energy and sustainability. Battery Smart, an EV battery-swapping infrastructure player, secured funding from global climate-focused funds like LeapFrog Investments. The sector’s appeal is bolstered by government policies and rising consumer demand for eco-friendly solutions, with EV startups like EKA Mobility and Kazam scaling their charging networks.
4. E-commerce and D2C: Steady Growth
E-commerce led in deal volume with 109 deals, raising $1.2 billion, more than double the amount from H1 2024. Direct-to-consumer (D2C) brands like Snitch, which raised ₹341.5 crore ($41 million), are capitalizing on India’s urban youth market. The sector’s growth is driven by omnichannel strategies and increasing consumer spending in tier-2 and tier-3 cities.
5. Defense Tech: A New Frontier
Defense tech startups are witnessing unprecedented investor interest, driven by geopolitical tensions and government support for indigenous innovation. Indian drone startups alone raised over $414 million, with companies developing cybersecurity and military AI solutions also attracting significant capital. This trend underscores the strategic importance of defense tech in India’s startup ecosystem.
Regional Dynamics: Beyond Bengaluru’s Dominance
Bengaluru remains the epicenter of startup funding, securing $2.54 billion across 285 deals in H1 2025, accounting for 38% of total funding. However, Delhi NCR is closing the gap, raising $1.5 billion across 252 deals and leading in the startup IPO space with 14 listed new-age tech companies. Mumbai followed with $853 million, while tier-2 and tier-3 cities are emerging as new hubs, reflecting India’s push for regional diversification in entrepreneurship. This shift aligns with national priorities to foster innovation beyond traditional metros, with startups in cities like Jaipur and Ahmedabad gaining traction.
Funding Stages: Growth-Stage Deals Shine
The funding distribution in H1 2025 highlights a focus on growth-stage investments, which accounted for $3.05 billion across 68 deals. Early-stage funding remained steady at $683 million across 209 deals, indicating sustained interest in emerging startups, particularly in SaaS, AI, and fintech. Seed-stage funding, however, saw a 19.36% decline to $1.08 billion, reflecting investor caution toward unproven ventures. Series B rounds were particularly strong, contributing over 70% of weekly funds in June 2025, with deals like Snitch’s ₹341.5 crore round showcasing confidence in companies with proven traction.
Mergers and Acquisitions: A Surge in Consolidation
H1 2025 witnessed a 40% increase in mergers and acquisitions (M&As), with 207 deals compared to 410 in all of 2024. Landmark transactions included Hindustan Unilever’s $350 million acquisition of D2C skincare brand Minimalist and Everstone’s $200 million acquisition of SaaS firm Wingify. Other notable deals involved PayU acquiring Mindgate Solutions and Jumbotail acquiring Solv, signaling a trend toward market consolidation and strategic exits. This surge reflects a maturing ecosystem where established players seek to acquire complementary businesses to fuel growth.
IPO Pipeline: A Promising Outlook
The Indian startup ecosystem is gearing up for a robust IPO pipeline in 2025. Twenty-three startups were in various stages of IPO preparations at the start of the year, with co-working spaces like Awfis, Smartworks, and WeWork India leading the charge. Proptech startup Square Yards is planning a ₹2,000 crore IPO by March 2026, while Infra.Market raised $50 million in debt to prepare for its public listing. The success of these IPOs could further boost investor confidence and attract more capital to the ecosystem.
Investor Trends: Family Offices and Global Funds Step Up
H1 2025 saw increased participation from family offices, such as the Ravi Modi Family Office and the Patni family, in growth-stage rounds. Global investors like LeapFrog Investments, responsAbility, and Mars Growth Capital also played a significant role, particularly in climate tech and fintech. European Union-based investors led with 1,117 funding rounds, followed by domestic players like BIRAC and LetsVenture. The rise of family offices and global funds indicates a diversification of capital sources, reducing reliance on traditional venture capital.
Government Support: Bolstering the Ecosystem
Government initiatives continue to play a pivotal role in supporting startups. The Startup India Seed Fund Scheme &
System:
Startup Funding Trends in India: 2025 Mid-Year Report
India’s startup ecosystem, ranking as the third-largest globally, has shown remarkable resilience in the first half of 2025 (H1 2025), raising approximately $5.7 billion across 916 equity funding rounds. This marks an 8% increase from the $5.3 billion raised in H1 2024, signaling a cautious yet optimistic recovery from the funding winter of previous years. This report explores the key trends, sectoral shifts, regional dynamics, and future outlook for India’s startup funding landscape, drawing on the latest industry insights.
A Resilient Recovery Amid Global Challenges
After a challenging 2023, where funding hit a seven-year low of $10 billion, and a stabilizing 2024 with $12 billion raised, H1 2025 reflects a measured rebound. The $5.7 billion raised, though 35.25% lower than the $12 billion in H1 2024, indicates sustained investor interest despite global macroeconomic pressures, including high interest rates and geopolitical uncertainties. Investors are prioritizing startups with strong unit economics, profitability, and scalability, moving away from the growth-at-all-costs model of 2021–2022. This shift has created a more disciplined funding environment, with deal quality taking precedence over quantity.
Sectoral Shifts: Fintech, AI, and Climate Tech in Focus
The funding landscape in H1 2025 highlights a maturing ecosystem with diverse sectoral investments. The following sectors are driving the funding surge:
1. Fintech: The Dominant Force
Fintech remains the top-funded sector, securing $1.6 billion across 68 deals, a 56% increase from H1 2024. India’s digital infrastructure, particularly the Unified Payments Interface (UPI), and the demand for financial inclusion solutions have fueled this growth. Notable deals include Infinity Fincorp’s $70 million infusion and Multipl’s partnership with FundsIndia to expand spendvesting. Fintech startups focusing on lending, payments, and wealth management are attracting capital due to their ability to serve underserved markets and leverage India’s digital economy.
2. Artificial Intelligence (AI): The Emerging Powerhouse
AI startups raised $355.68 million in H1 2025, with Bengaluru-based firms like Impetus Technologies ($350 million) and Innovaccer ($275 million) leading the charge. A 39.9% year-on-year increase in AI funding reflects growing investor confidence in AI-driven solutions for healthcare, analytics, and SaaS platforms. The launch of India’s largest H200 GPU cluster by E2E Networks underscores the focus on building AI infrastructure tailored to Indian startups and researchers.
3. Climate Tech and Electric Vehicles (EV): Sustainability Gains Traction
Climate tech and EV startups are drawing significant capital, driven by India’s push for green energy and sustainability. Battery Smart, a battery-swapping infrastructure player, secured funding from global climate-focused funds like LeapFrog Investments and responsAbility. EV startups like EKA Mobility and Kazam are scaling their charging networks, supported by government policies and rising consumer demand for eco-friendly solutions.
4. E-commerce and D2C: Steady Momentum
E-commerce led in deal volume with 109 deals, raising $1.2 billion, more than double the amount from H1 2024. Direct-to-consumer (D2C) brands like Snitch, which raised ₹341.5 crore ($41 million), are capitalizing on India’s urban youth market and expanding omnichannel presence. The growth in tier-2 and tier-3 cities is driving consumer spending, making D2C a key focus for investors.
5. Defense Tech: A Strategic Frontier
Defense tech startups are gaining unprecedented attention due to geopolitical tensions and government support for indigenous innovation. Indian drone startups raised over $414 million, with companies developing cybersecurity and military AI solutions also attracting significant capital. This trend highlights the strategic importance of defense tech in India’s startup ecosystem.
Regional Dynamics: Diversification Beyond Bengaluru
Bengaluru remains the funding epicenter, securing $2.54 billion across 285 deals, accounting for 38% of total funding. However, Delhi NCR is closing the gap, raising $1.5 billion across 252 deals and leading in the startup IPO space with 14 listed new-age tech companies. Mumbai followed with $853 million, while tier-2 and tier-3 cities are emerging as new hubs, reflecting India’s push for regional diversification. Startups in cities like Jaipur and Ahmedabad are gaining traction, aligning with national priorities to foster entrepreneurship beyond metros.
Funding Stages: Growth-Stage Deals Take Center Stage
Growth-stage investments dominated H1 2025, accounting for $3.05 billion across 68 deals, with Series B rounds contributing over 70% of weekly funds in June 2025. Early-stage funding remained steady at $683 million across 209 deals, particularly in SaaS, AI, and fintech. Seed-stage funding, however, declined 19.36% to $1.08 billion, reflecting investor caution toward unproven ventures. Notable growth-stage deals include Snitch’s ₹341.5 crore round and Impetus Technologies’ $350 million raise, showcasing confidence in companies with proven traction.
Last Updated on Tuesday, July 15, 2025 8:32 pm by Ediga vivekanandha Goud
About Author
