IPOs on Hold, Funding Slows—What’s Next for Indian Startups?

The stock market may not perfectly capture the nation’s economic pulse, but it remains a dynamic barometer of investor sentiment. Trends shaping the stock market ripple through the startup funding landscape. For the first time since May 2023, a month has passed without a single initial public offering (IPO), marking a notable pause in market activity. IPOs have significantly slowed in 2025, with only nine listings in the first quarter compared to 22 during the same period last year.

Venture capital (VC) funding has also taken an unpredictable path, fluctuating between $110 million and $412 million weekly. However, the final week of March saw a rebound, with $143.7 million raised across 16 deals—a 32% increase from $109.2 million raised the previous week across 18 deals. 

Fintech continued to dominate funding trends, with five startups raising $98.1 million—more than double the sector’s fresh capital influx from the previous week. While fintech led in deal count, enterprise tech and e-commerce each saw three startups raise $15.6 million and $9 million, respectively. Early-stage startups were in focus, as four deals raised $18.6 million, marking an 84% increase from last week’s $10.1 million.

Macroeconomic Challenges and Funding Landscape

Macroeconomic turbulence has created a stormy funding climate, driven by a domestic slowdown and looming U.S. tariffs. Early-stage startups dominated deal volumes, highlighting investors’ appetite for fresh ideas. However, growth-stage companies claimed the lion’s share of capital, reflecting a cautious yet optimistic outlook.

Deals That Stole the Spotlight

Despite challenges, notable deals showcased the ecosystem’s vibrancy:

• Groww: In advanced talks to raise $200 million from GIC and Tiger Global at a valuation of $6.5 billion.
• Smallcase: Secured $50 million from Elev8 Venture Partners and others.
• Country Delight: Bagged ₹212.49 crore (~$25 million) from V-Sciences Investments.
• Apna Mart: Raised $25 million from Nandan Nilekani-led Fundamentum Partnership, Peak XV Partners, and Sparrow Capital.
• Country Delight (Series E): To raise $25 million from Temasek’s V-Sciences Investments.
• Ecofy Finance: Secured $12.5 million from Denmark’s IFU.
• Grow Indigo: Gained $10 million from British International Investment.
• Curefoods: Raised $6.6 million from BlackSoil and others.

Mergers and acquisitions were also abuzz. Observe.AI acquired text-to-speech AI startup Dubdub.ai to enhance its voice AI offerings. JungleWorks acquired a majority stake in Outplay with plans to invest $14 million. Groyyo acquired a majority stake in Oussum Inc to strengthen its U.S. presence. Kouzina Food Tech acquired MOPP Foods, and Zagglewill acquire 45.33% of Effiasoft for ₹36.72 crore.

Green Shoots Amidst Uncertainty

Amid challenges, there are signs of resilience. VC firms remain undeterred, as 2am VC launched a new fund this month. Inflection Point Ventures celebrated 14 successful exits in 2024. Startups like Nexthop AI and Abound, with Indian roots but U.S. headquarters, successfully raised capital—underlining Indian innovation’s global appeal.

IPO Radar: Titans Preparing to Strike

Despite the slowdown, India’s IPO pipeline for 2025 remains robust, with heavyweights lining up for public listings:

• WeWork India faces a regulatory roadblock as SEBI has kept its IPO papers in "abeyance."
• Meesho has chosen Morgan Stanley, Kotak Mahindra Capital, and Citi for its $1 billion IPO.
• Cult.fit has lined up Axis Capital, Jefferies, Goldman Sachs, Morgan Stanley, and JM Financial for its ₹2,500 crore IPO.
• Fintech Powerhouses: PhonePe, Groww, PayU, InCred Finance are gearing up for the public markets.
• Consumer Darlings: Flipkart, Boat, Lenskart, and Zepto are preparing for splashy debuts.
• B2B Trailblazers: Zetwerk, Infra.Market, and Indiqube are ready to make waves.
• Mobility Innovators: Ola, Ecom Express, and CarDekho are preparing for the IPO runway.
• Edtech Giant: PhysicsWalla is set to redefine edtech on the public stage.

Startup Funding Outlook: Resilience Amid Headwinds

The Indian startup ecosystem faces a dual reality in 2025: macroeconomic challenges and investor caution on one side, and strategic bets on innovation and expansion on the other. Although consistent funding remains a work in progress, early-stage vigour and IPO enthusiasm signal a landscape ripe with potential. Startups must blend adaptability with bold, long-term visions to thrive.