Startup funding down by 15%; DeepTech, EnergyTech gain momentum

Indian startups in 2025 witnessed significant momentum in terms of sectoral focus such as DeepTech and EnergyTech, and particularly, AI played a driving force behind huge fundraising. However, overall, the startup ecosystem raised only $10.79 billion in 2025, a 15% decline compared to $12.65 billion raised in 2024.

Market intelligence platform Tracxn shared funding data with DH, which shows that startups raised $10.98 billion in 2023, and $24.35 billion in 2022. During the Covid period, in 2021, startups raised a record equity funding of $38.93 billion.

The winning sectors for 2025 are manufacturing, AI, and financials, Sattva Ventures Founder Adrija Agarwal said.

"India is becoming the world’s primary manufacturing alternative to China. Capital is pouring into startups that build electronics, semiconductors, and factory hardware because helping a country build its own essential goods is now a top priority. In the AI space, the focus has moved toward infrastructure and machines that run factories and warehouses," Agarwal said.

Meanwhile, financials are thriving because recent interest rate cuts have boosted the banking economy, drawing investors toward FinTech startups that provide credit and financial tools directly to businesses to help them scale.

In 2025, the FinTech sector raised $2.21 billion across 238 rounds. From 2020 to 2024, the sector raised total equity funding of $20.55 billion. While the DeepTech sector saw $1.52 billion fundraising, electric vehicle startups secured $1.50 billion funding in 2025.

Seed-stage witnessed a total funding of $1.1 billion in 2025, a 30% decline from $1.5 billion raised in 2024 and a 25% decline compared to $1.4 billion in 2023. Early-stage funding raised $3.9 billion in 2025, a 7% increase from $3.7 billion in 2024, and an 11% rise over $3.5 billion in 2023. According to Tracxn data, late-stage startups raised $5.5 billion, a 26% decline from $7.5 billion in 2024 and an 8% drop, compared to $6.0 billion in 2023.

"Investors have become much more cautious about time and now expect to see their money returned within 3-5 years. This has pushed most funding toward late-stage companies that are already proven. Early-stage startups face a tougher road and must prove they can be profitable quickly, to get noticed. Ultimately, 2026 is about certainty, scale, and backing businesses that are essential to the global economy," Agarwal said.

In 2025, consumer tech continues to evolve rapidly, creating opportunities for founders to build scalable products. Consumer AI, where tools and platforms that personalise experiences, automate workflows, or act as intelligent co-pilots, is gaining more strong traction, TDV Partners Founder and General Partner Ujwal Sutaria said.

"A broader theme of consumer upgrades, whether it’s in education, wellness, or lifestyle, is creating space for innovative companies that help people live smarter, healthier, and more connected lives. New-age Indian brands are being built across multiple verticals, including fragrances, women’s wear such as sarees, home linen categories like bedsheets and curtains, and broader home-care and home-decor products. These categories are expanding as consumers trade up in quality and design. The intersection of AI, consumer-first design, and real-world utility is shaping some of the most compelling opportunities in the startup ecosystem,” Ujwal Sutaria said.

Another industry that is seeing traction is the entire blue-collar and grey-collar workforce opportunity, particularly models that enable Indian workers to access better employment globally. This is a massive, structurally growing space, and companies building transparent, efficient, or tech-enabled solutions for this segment are very compelling. India has a major opportunity to export manpower. Just like Indians lead global companies at the white-collar level, Sutaria believes similar opportunities will emerge for blue-collar workers.

India Tech recorded 42 IPOs in 2025, a 17% increase over 36 IPOs in 2024, and a 62% rise compared to 26 IPOs in 2023.

"2025 has been a defining year for the startup ecosystem of India. Whereas the earlier years were about nurturing unicorns, the focus of 2025 was on realising meaningful IPOs. These IPOs have yielded tremendous returns for early-stage investors and early backers of young startups. These returns to early-stage investors have brought the limelight to angel investing and inspired more people to evaluate and invest in startups, and a brilliant cycle is thus created. The momentum for the years ahead is clearly building," Inflection Point Ventures Co-founder Ankur Mittal said.

52 unicorns in Bengaluru

India hosts 124 unicorns, accounting for close to 6% of the global total, positioning it as the third-largest unicorn ecosystem after the US and China. As many as five unicorns were created in 2025, same as 2024. Bengaluru has 52 unicorns, followed by Gurugram at 20, and Mumbai at 19.

Bengaluru continues to lead in startup acquisitions in India, with 42 acquisitions in 2025, and 47 acquisitions in 2024. Mumbai followed with 24 acquisitions in 2025, and 24 in 2024.

India’s unicorn ecosystem in 2025 remains highly concentrated, with Bengaluru, Mumbai, and Gurugram accounting for over 70% of unicorns.