India’s startup ecosystem witnessed a week of regulatory shocks, marquee funding deals, and industry-defining trends from September 20 to 27, 2025. Despite a funding slowdown, India continues to hold its ground as the world’s third-largest startup hub, only behind the US and the UK. 

Top 5 Takeaways

1. RBI cracks down on Bengaluru fintech Simpl, halting all payment operations.
2. Curefoods (Bengaluru) secures ₹160 crore pre-IPO from Binny Bansal’s 3State Ventures.
3. Chakr Innovation (Delhi NCR) raises ₹193.5 crore in Series C, the week’s largest funding.
4. Swiggy (Bengaluru) exits its stake in Rapido as M&A activity heats up.
5. Despite a 23% YoY funding dip, India remains the third-largest startup hub globally.

RBI Tightens the Screws on Simpl

The Reserve Bank of India issued a decisive order against Simpl, a Bengaluru-based fintech unicorn, instructing the company to immediately halt all payment, clearing, and settlement operations. The intervention underscores rising compliance scrutiny in India’s financial technology sector, which has grown rapidly but is increasingly under the regulator’s lens.

Startup Funding Flows to Selective Sectors

While a Tracxn report showed a 23% year-on-year decline in startup funding during the first nine months of 2025, investor activity remained strong in select hubs.

Curefoods, headquartered in Bengaluru, raised ₹160 crore ($18 million) in a pre-IPO placement led by Binny Bansal’s 3State Ventures, cementing its IPO ambitions in the cloud kitchen space. Delhi NCR’s Chakr Innovation closed the week’s biggest round, raising ₹193.5 crore in Series C funding, with ONGC and Iron Pillar backing the cleantech venture.

Delhi NCR also saw Emergent AI secure $23 million from Lightspeed, Y Combinator, and Prosus Ventures, while Handpickd (Mumbai) brought in $15 million. Rocket, Vedantu, and Simple Energy added to Bengaluru’s tally, while KisanKonnect (Mumbai) and Distil (Delhi NCR) attracted fresh capital as well.

Deals, Acquisitions, and Exits

Consolidation defined the week’s corporate headlines. Swiggy exited its 11.8% stake in Rapido, with Prosus and WestBridge Capital acquiring the shares at a higher valuation. In Mumbai, Prolifics acquired Castaliaz Technologies, while India Accelerator in Gurugram (Delhi NCR) bought SaaS startup MySoho, strengthening its SME-focused portfolio.

Trends Shaping the Ecosystem

The funding slowdown is reshaping founder strategies. Entrackr reported that many startup founders are diluting over 40% equity by Series A, prioritizing growth capital over long-term control.

Despite tighter capital inflows, India continues to rank as the third-largest startup hub globally, with Bengaluru, Delhi NCR, and Mumbai leading the charge.

Policy discussions also gained momentum this week. The Ministry of Electronics and Information Technology (MeitY) in Delhi is considering setting up a “technical secretariat” to coordinate AI policy across multiple government departments, rather than creating a single regulator. This decentralized approach could foster faster innovation while avoiding regulatory bottlenecks, allowing different ministries to tailor AI oversight to their specific sectors — from healthcare and education to finance and agriculture.

Corporate Moves and New Launches

The week also saw a series of business updates. PhysicsWallah launched LexGlobal in Delhi, offering legal training and certifications. Fintech firm BharatPe (Delhi NCR) announced EBITDA profitability with ₹1,667 crore in FY25 revenue, while mobility player Spinny (Gurugram) reported widening losses despite revenue growth.

On the diversity front, a study by Avtar found that women now hold 20% of leadership roles in top Indian companies, with corporates in Mumbai and Bengaluru leading this progress. Looking beyond metros, IIT Indore launched a HealthTech Innovation Challenge, supporting early-stage healthcare startups in Tier-2 cities.

Q&A: Indian Startup Weekly Highlights

What happened to Simpl in September 2025?

The RBI ordered Bengaluru fintech Simpl to suspend all payment-related operations due to compliance concerns.

Which startups raised the most funding this week?

• Chakr Innovation (Delhi NCR): ₹193.5 crore (Series C)
• Curefoods (Bengaluru): ₹160 crore pre-IPO
• Emergent AI (Delhi NCR): $23 million Series A

Which Indian city led startup funding this week?

Bengaluru topped with deals from Curefoods, Rocket, Vedantu, and Simple Energy. Delhi NCR followed with Chakr Innovation and Emergent AI, while Mumbai saw Handpickd and KisanKonnect raises.

What were the biggest acquisitions this week?

• Swiggy sold its stake in Rapido (Bengaluru).
• Prolifics acquired Castaliaz Technologies (Mumbai).
• India Accelerator acquired MySoho (Delhi NCR).

Is India still a top global startup hub?

Yes. Despite slowing investment, India remains the third-largest startup hub globally, behind only the US and UK.

Why It Matters

This week’s developments underline a changing narrative: fintech regulation in Bengaluru, IPO moves in Mumbai, and AI policy in Delhi NCR are reshaping the ecosystem. With investors selective and founders conceding larger equity stakes, the path forward will require capital efficiency, regulatory alignment, and global market expansion.

Future Watch: What’s Next for October 2025

As India enters Q4, the startup ecosystem is bracing for key developments. IPO momentum is expected to pick up with Curefoods and other late-stage startups preparing draft filings. On the policy front, the government may release early frameworks around AI regulation, following MeitY’s “technical secretariat” discussions. Meanwhile, with the festive season driving consumption, e-commerce, mobility, and fintech startups could see a temporary surge in funding and customer acquisition.