Startup Funding Hits 4-Year Low: Will Startup Mahakumbh Power a Comeback?

The tale of Indian startups is one of grit, determination, and resilience. Over the past few years, the ecosystem has weathered numerous storms — from global economic downturns to the cautious withdrawal of major investors. Yet, three months into 2025, a palpable sense of optimism and revival emerges. 

April 2025 marks a pivotal moment — the beginning of the first quarter of FY 2025-26 will witness India’s biggest startup event — Startup Mahakumbh 2025. According to DPIIT, 1,000+ startups, 300+ investors, 150+ key speakers, and over 50,000 buyers are set to converge at this monumental gathering from April 3-5, 2025, showcasing the vibrancy and resilience of the Indian startup ecosystem. It’s not just an event — it’s a symbol of the resurgence and evolution of the startup landscape.

The Funding Freeze of 2024

The year 2024 marked a winter of discontent for Indian startups. Funding hit a four-year low of $2.7 billion, a sharp drop from $4 billion in 2023, according to data from Venture Intelligence. The specter of the global tech downturn from 2022 and 2023 loomed large, shaking investor confidence. Giants like SoftBank and Tiger Global, once known for their bullish bets on Indian startups, stayed cautious, refraining from significant investments.

Amid this bleak landscape, the number of $100 million-plus funding rounds plummeted from ten in 2023 to just four in 2024. Venture capital and growth funds found themselves sitting on significant capital, unable to deploy previously raised funds. This cautious approach by global investors left a vacuum — one that local players began to fill.

India’s New Funding Powerhouses

As the saying goes, "When the going gets tough, the tough get going." In the absence of global giants, local family offices and India-focused hedge funds, such as Hornbill Capital, stepped up. These local heroes led nearly 50% of $100 million-plus deals in 2024 — a significant shift in the investment landscape.

This wasn’t a temporary blip. Analysts from Bain & Company predict that the role of local investors will continue to grow, providing a stable, more attuned support system for Indian startups. This shift underscores the importance of building strong relationships with domestic investors, who understand the intricacies of the Indian market better than their global counterparts.

Why Startups Struggle — and What’s Changing

The high failure rate of Indian startups remains a sobering reality. A study by the IBM Institute for Business Value and Oxford Economics found that 90% of Indian startups fail within their first five years — citing talent shortages, bureaucratic hurdles, intense competition, regulatory ambiguities, infrastructure gaps, and scaling challenges.

Yet, in the face of these challenges, hope is on the horizon. Industry reports from Tracxn and NASSCOM suggest that the Indian startup ecosystem is poised for a turnaround in 2025. Layoffs have dropped significantly, signaling a sector-wide recovery. The government’s pro-startup budget for 2025 has introduced bold measures, including:

• A new Rs 10,000 crore Fund of Funds for Startups (FFS) — empowering early-stage ventures.
• A Deep Tech Fund of Funds — designed to accelerate innovation in emerging technologies.
• Enhanced credit guarantees and moderated loan fees across 27 high-potential sectors — reducing financial bottlenecks for scaling startups.

The Future is Here: Emerging Sectors Redefining the Startup Map

For startup entrepreneurs in 2025, the path forward is one of cautious optimism — and strategic adaptation. As funding conditions improve, hiring is projected to surge by 20-30%, according to industry estimates.

Moreover, the emergence of cutting-edge sectors presents fresh growth opportunities:

• • Web3 & Blockchain: With 1,200+ Web3 startups driving innovation across finance, infrastructure, and entertainment, India is rapidly emerging as a global leader. In 2024 alone, these startups raised $564 million — reflecting a 109% surge from the previous year (source: NASSCOM).
  • Climatetech & Sustainability: Energy innovation, carbon tech, and sustainable infrastructure are attracting green capital, aligning with global climate goals.
  • Healthtech & Medtech: AI diagnostics, telemedicine, and biotech breakthroughs continue to attract investments post-pandemic.
  • Agritech & Foodtech: Precision farming, supply chain optimization, and sustainable food solutions are key areas gaining traction.
  • Fintech 2.0: Neobanking, embedded finance, and SME-focused digital infrastructure are driving the next fintech evolution.
  • Deeptech & AI: India’s growing AI talent pool is fueling advancements in automation, data intelligence, and robotics — critical to global competitiveness.

A New Dawn for Indian Startups

The challenges of 2024 have paved the way for a revival in 2025. By adapting to the changing investor dynamics, leveraging robust government support, and focusing on emerging high-growth sectors, startup entrepreneurs can navigate this evolving landscape and achieve sustainable, scalable success.

As April 2025 approaches, Startup Mahakumbh 2025 stands not only as a grand event but as a symbol of resurgence — gathering entrepreneurs, investors, and industry leaders to shape the future. It embodies the renewed vigor and potential of the Indian startup ecosystem. The Indian startup ecosystem is at a crossroads — and resilience remains its defining trait. The question now is: Will your startup be among those leading India’s next great wave of innovation?