<div id="readability-page-1"><div> <p id="speakable-summary">India’s startup ecosystem raised nearly $11 billion in 2025, but investors wrote far fewer checks and grew more selective about where they took risk, underscoring how the world’s third most-funded startup market is diverging from the AI-fueled capital concentration seen in the U.S.</p> <p>The selective approach was most evident in deal-making. The number of startup funding rounds fell by nearly 39% from a year earlier, to 1,518 deals, according to Tracxn. Total funding slipped more modestly — down just over 17% to $10.5 billion.</p>   <p>That pullback was not uniform. Seed-stage funding fell sharply to $1.1 billion in 2025, down 30% from 2024, as investors cut back on more experimental bets. Late-stage funding also cooled, slipping to $5.5 billion, a 26% decline from last year, amid tougher scrutiny of scale, profitability, and exit prospects. However, early-stage funding proved more resilient, rising to $3.9 billion, up 7% year-over-year.</p> <figure><img height="1600" src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/stage-wise-funding-india-2025-tracxn.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1920" original-src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/stage-wise-funding-india-2025-tracxn.jpg"/><figcaption><span><strong>Image Credits:</strong>Tracxn</span></figcaption></figure> <p>“The capital deployment focus has increased towards early-stage startups,” said Neha Singh, co-founder of Tracxn, pointing to growing confidence in founders who can demonstrate stronger product–market fit, revenue visibility and unit economics in a tighter funding environment.</p> <h2 id="h-the-ai-quest">The AI quest</h2> <p>Nowhere was that recalibration clearer than in AI, as AI startups in India raised just over $643 million across 100 deals in 2025, a modest 4.1% increase from a year earlier, per Tracxn data shared with TechCrunch. The capital was mainly spread across early and early-growth stages. Early-stage AI funding totaled $273.3 million, while late-stage rounds raised $260 million, reflecting investor preference for application-led businesses over capital-intensive model development.</p> <p>This was in sharp contrast to the U.S., where AI funding in 2025 surged past $121 billion across 765 rounds, per Tracxn, a 141% jump from 2024, and was overwhelmingly dominated by late-stage deals.</p> <p>“We don’t yet have an AI-first company in India, which is $40–$50 million of revenue, if not $100 million, in a year’s time frame, and that is globally happening,” said Prayank Swaroop, a partner at Accel.</p> <div> <div>  <p>Techcrunch event</p> <div>  <p><span>San Francisco</span> <span>|</span> <span>October 13-15, 2026</span> </p>  </div> </div> </div> <p>India, Swaroop told TechCrunch, lacks large foundational model companies and will take time to build the research depth, talent pipeline, and patient capital needed to compete at that layer — making application-led AI and adjacent deep-tech areas a more realistic focus in the near term.</p> <p>This pragmatism has shaped where investors are placing longer-term bets outside core AI. Venture capital is increasingly flowing into manufacturing and deep-tech sectors. These are some of the areas where India faces less global capital competition and has clear advantages in talent, cost structures, and customer access.</p> <p>While AI now absorbs a significant share of investor attention, capital in India arguably remains more evenly distributed than in the U.S., with substantial funding still flowing into consumer, manufacturing, fintech, and deep-tech startups. Swaroop noted that advanced manufacturing in particular has emerged as a long-term opportunity, with the number of such startups increasing nearly tenfold over the past four to five years — an area he described as a clear “right to win” for India given lower global capital competition.</p>   <p>Rahul Taneja, a partner at Lightspeed, said AI startups accounted for roughly 30–40% of deals in India in 2025, but pointed to a parallel surge in consumer-facing companies as changing behaviour among India’s urban population creates demand for faster, more on-demand services — from quick commerce to household services — categories that play to India’s scale and density rather than Silicon Valley–style capital intensity.</p> <h3 id="h-india-versus-the-u-s">India versus the U.S.</h3> <p>Data from PitchBook shows a stark divergence in capital deployment between India and the U.S. in 2025. U.S. venture funding surged to $89.4 billion in the fourth quarter alone, according to PitchBook data up to December 23, compared with about $4.2 billion raised by Indian startups over the same period.</p> <figure><img height="1453" src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/indian-startup-funding-count-deal-size-2025.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1920" original-src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/indian-startup-funding-count-deal-size-2025.jpg"/><figcaption><span><strong>Image Credits:</strong>Jagmeet Singh / TechCrunch</span></figcaption></figure> <p>However, that gap does not tell the whole story.</p> <p>Lightspeed’s Taneja cautioned against drawing direct parallels between India and the U.S., arguing that differences in population density, labour costs, and consumer behaviour shape which business models can scale. Categories such as quick commerce and on-demand services have found far greater traction in India than in the U.S., reflecting local economics rather than any lack of ambition among founders or investors.</p> <p>Recently, Lightspeed raised $9 billion in fresh capital with a strong focus on AI, but Taneja said the move does not signal a wholesale shift in the firm’s India strategy. The U.S. fund, he noted, is geared toward a different market and maturity cycle, while Lightspeed’s India arm will continue backing consumer startups alongside selectively exploring AI opportunities shaped by local demand rather than global capital intensity.</p> <h3 id="h-nuances-in-india-s-startup-ecosystem">Nuances in India’s startup ecosystem</h3> <p>India’s startup ecosystem also saw funding for women-led startups tighten. Capital invested in women-founded tech startups held relatively steady at about $1 billion in 2025, down 3% from a year earlier, according to Tracxn’s report. Still, that headline figure masked a sharper pullback beneath the surface. The number of funding rounds in women-founded startups fell by 40%, while their first-time funded counterparts declined by 36%.</p> <figure><img height="446" src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/women-indian-startups-2025-tracxn.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1510" original-src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/women-indian-startups-2025-tracxn.jpg"/><figcaption><span>India’s women-led startups saw a 3% dip in funding in 2025</span><span><strong>Image Credits:</strong>Tracxn</span></figcaption></figure> <p>Overall, investor participation narrowed sharply as selectivity increased, with about 3,170 investors taking part in funding rounds in India this year, a 53% drop from roughly 6,800 a year earlier, according to Tracxn data shared with TechCrunch. India-based investors accounted for nearly half of that activity, with around 1,500 domestic funds and angels participating — a sign that local capital played a more prominent role as global investors turned cautious.</p> <p>Activity also became more concentrated among a smaller group of repeat backers. Inflection Point Ventures emerged as the most active investor, participating in 36 funding rounds, followed by Accel with 34, Tracxn data shows.</p>   <p>The Indian government’s participation in the startup ecosystem became more visible in 2025. New Delhi announced a $1.15 billion Fund of Funds in January to expand capital access for startups, followed by a ₹1 trillion ($12 billion) Research, Development, and Innovation scheme aimed at areas such as energy transition, quantum computing, robotics, space technology, biotech, and AI, using a mix of long-term loans, equity infusions and allocations to deep-tech funds.</p> <p>That push has begun to catalyze private capital as well. The government’s growing involvement helped spur a nearly $2 billion commitment from U.S. and Indian venture capital and private equity firms, including Accel, Blume Ventures, and Celesta Capital, to back deep-tech startups — an effort that also brought Nvidia on board as an adviser and drew Qualcomm Ventures. Furthermore, the Indian government also co-led a $32 million funding for quantum computing startup QpiAI earlier this year — a rare federal move.</p> <p>This growing state involvement has helped ease a risk long flagged by investors: regulatory uncertainty. “One of the biggest risks you don’t want to underwrite is what happens if regulation changes,” said Taneja of Lightspeed.</p> <p>As government entities become more familiar with the startup ecosystem, Taneja added, policy is more likely to evolve alongside it — reducing uncertainty for investors backing companies with longer development cycles.</p> <h3 id="h-exits-in-india">Exits in India</h3> <p>The reduced uncertainty has already started to show up in exit markets to some extent. India saw a steady pipeline of technology IPOs over the past two years, with 42 tech companies going public in 2025, up 17% from 36 in 2024, per Tracxn. Much of the demand for those listings has come from domestic institutional and retail investors, easing long-standing concerns that Indian startup exits depend too heavily on foreign capital. M&amp;A activity also picked up, with acquisitions rising 7% year-over-year to 136 deals, Tracxn data shows.</p> <p>Swaroop of Accel said investors had long worried that India’s public markets were mainly sustained by foreign capital, raising questions about exit durability during global downturns. “This year has disproven that,” he said, pointing to the growing role of domestic investors in absorbing technology listings — a shift that has made exits more predictable and reduced reliance on volatile overseas flows.</p> <figure><img height="1500" src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/india-ipo-growth-2025-tracxn.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1920" original-src="https://imageproxy.pbkrs.com/https://techcrunch.com/wp-content/uploads/2025/12/india-ipo-growth-2025-tracxn.jpg"/><figcaption><span><strong>Image Credits:</strong>Tracxn</span></figcaption></figure> <p>India’s unicorn pipeline in 2025 also reflected that shift toward restraint. While the number of new unicorns remained flat year over year, Indian startups reached $1 billion valuations with less capital, fewer funding rounds, and a smaller pool of institutional investors, pointing to a more measured path to scale compared with both previous years and global peers.</p> <p>Challenges remain as India heads into 2026, particularly around how it positions itself in the global race for AI and whether late-stage funding can deepen without relying on outsized capital inflows.</p>   <p>Even so, the shifts seen in 2025 point to a startup ecosystem that is maturing rather than retreating — one where capital is being deployed more deliberately, exits are becoming more predictable, and domestic market dynamics increasingly shape its growth. For investors, India is emerging less as a substitute for developed markets and more as a complementary arena with its own risk profile, timelines, and opportunities.</p> </div></div>

<p>India's startup ecosystem raised $11 billion in 2025, with investors becoming more selective, leading to a 39% drop in funding rounds. Seed-stage funding fell 30%, while late-stage funding declined 26%. Early-stage funding rose 7%, indicating a focus on startups with strong product-market fit. AI funding increased modestly, contrasting with the U.S. surge. Venture capital is shifting towards manufacturing and deep-tech sectors, reflecting India's advantages in talent and cost structures. Despite AI's prominence, funding remains diverse across consumer, fintech, and deep-tech startups.</p>

India startup funding hits $11B in 2025 as investors grow more selective