Indian Startups Raised $3.1 Bn In Q1 2025, But Funding Momentum Remains Flat

At a time when the Indian startup ecosystem is filled to the brim with the fervour to give investors exits via the public listing route, investors seem to be treading cautiously — at least what Inc42’s latest shows. 

As per Inc42’s “Indian Tech Startup Funding Report, Q1 2025”, even though Indian startups have managed to see a 41% year-on-year (YoY) uptick in funding in the first quarter (Q1) of 2025 (January to March), the metric has largely remained unchanged in comparison to Q2, Q3 and Q4 of 2024.

Indian startups raised $3.1 Bn across 232 deals between January 1 and March 26 versus $2.2 Bn raised in 226 deals in the same quarter last year.

However, in the next three quarters of 2024, the funding amount remained flat at $3.1 Bn in Q2, $3.4 Bn in Q3, and $3.1 Bn in Q3 2024.

Overall, investors wrote an average cheque of $3 Mn for startups during the period. Although this reflects a 23% YoY drop, the median ticket size remained steady compared to the previous quarter.

Notably, industry experts believe that the Indian startup funding landscape, despite a YoY uptick, is undergoing churn. This is because most funds are focussed on finding strong founders with clear paths to revenue and profitability. 

“And this is despite the copious amounts of dry powder VCs are sitting on,” NuVentures Venk Krishnan said, highlighting a major gap in the VC ecosystem. 

Despite the ecosystem crossing $161 Bn in total funding across 11,200+ deals since 2014, the funding momentum in Q1 2025 reveals a more nuanced reality — one shaped by cautious investor sentiment and a sharper focus on quality over quantity. Here’s a closer look at how startup funding trends unfolded this quarter.

Stage-Wise Funding At A Glance

Seed stage startups bagged $188 Mn across 104 deals, up 18% from the nearly $160 Mn raised in the year-ago quarter. In the entirety of 2024, seed stage funding was up 31% to $893 Mn from $681 Mn in 2023. A further 18% rise shows that investors are willing to splurge on new ventures as GenAI takes centre stage.

 

During the just-concluded quarter, early stage names like Singulr AI and Gyaan AI (now MaxIQ) bagged big bucks to the tune of $10 Mn and $7.8 Mn, respectively, highlighting that investors are happy to loosen their purse strings for enterprise tech and SaaS startups. The trend saw enterprise tech retain its dominance as investors’ favourite sector in this segment.

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Meanwhile, growth stage funding, comprising Series B and Series C rounds, did not see much action in Q1. Startups at this stage raised $1 Bn across 68 deals, marking a 7% YoY increase. 

Moving on, the biggest YoY increase in terms of overall funding came for late stage startups. Startups at this stage raised $1.8 Bn+ in 38 deals, up nearly 80% YoY.  

During the period under review (Q1 2025), six startups netted mega funding rounds (above $100 Mn). Indian startups could raise a mere three rounds in the year-ago quarter.  Sequentially, the number of such deals was slightly lower from seven in the final quarter of 2024. 

Healthtech startup Innovaccer raised $275 Mn in a Series F round, registering itself as the largest round of the quarter. Other companies to have raised mega deals during the quarter were — Zolve’s Series B $251 Mn, DarwinBox’s $140 Mn fund raise, Infra.Market’s pre-IPO round of $121 Mn and Leap Finance’s $100 Mn funding. 

Besides, as many as 31 startups raised fresh funds in the range of $20 Mn to $99 Mn during the quarter.

Fintech Sector Remains Investors’ Top Bet

On the back of multiple late stage rounds materialising in the quarter, fintech was investors’ favourite destination, securing $739 Mn versus $610 Mn raised by ecommerce startups and $458 Mn netted by enterprise tech. 

However, when it came to deal count, the fintech sector took the third spot on the Q1 2025 funding podium, with enterprise tech and ecommerce bagging 36 and 47 deals, respectively.   

Interestingly, despite accounting for the largest funding round (Innovaccer), the healthtech sector couldn’t garner much investor interest.

Startups in the sector cumulatively raised $301 Mn. Industry experts have attributed the lack of fresh capital influx in the segment to the monopoly of established players, the capital incentive nature of the business, and a lack of exit opportunities.

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M&As See A Revival In 2025

After a slowdown in consolidation activity last year, the startup ecosystem saw a revival in mergers and acquisitions (M&As) in Q1 2025. 

A total of 26 M&A deals materialise during this quarter, up 73% from 15 such deals in Q1 2024 and 120% from 12 M&As in Q4 2024. 

Two of the largest acquisitions were HUL’s purchase of D2C skincare brand Minimalist and PE firm Everstone’s acquisition of a majority stake in SaaS company Wingify for around $200 Mn. Minimalist’s founders Mohit Yadav and Rahul Yadav cumulatively made about INR 1,500 Cr. 

The fintech sector was the most active in terms of acquisitions, with companies like Perfios, Incred, and Super.money acquiring smaller startups to strengthen their product offerings.

Bengaluru Is India’s Most-Favoured Investor Destination  

After losing its top spot to Mumbai in 2024, Bengaluru has regained its position as the leading startup hub in Q1 2025.

Startups in Bengaluru raised $1.4 Bn across 78 deals, nearly half of the total funding raised by startups across India during this period. 

Netradyne’s unicorn status and Zolve’s mega funding round contributed to Bengaluru’s strong performance.

Meanwhile, Delhi took second place, with startups raising $690 Mn across 48 deals, and Mumbai slipped to third place, with startups in the city raising $453 Mn across 42 deals. 

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[Edited By Shishir Parasher]