India’s Startup Funding Falls 25%—But That’s Not the Whole Story

Indian tech startups raised $4.8 billion in the first half of 2025, marking a 25% decline from the $6.4 billion raised during the same period in 2024 and a 19% fall from $5.9 billion in H2 2024. The data, published by market intelligence platform Tracxn, reflects a funding environment that is more selective, disciplined, and long-term in outlook.

Yet, despite the decline in overall capital inflow, India ranked third globally in technology startup funding, ahead of traditional innovation hubs like Germany and Israel, and behind only the United States and the United Kingdom. This indicates a deeper resilience and maturity in India’s startup ecosystem, which is adapting to a new funding climate defined by prudence and performance.

Funding Slows, but Strategic Capital Remains

The volume of large deals has decreased, but critical sectors continue to attract meaningful investments. According to Tracxn’s report, only five funding rounds crossed the $100 million mark in H1 2025, compared to 9 in H2 2024 and 10 in H1 2024.

Key deals in H1 2025 included:

• Erisha E Mobility raising $1 billion in a Series D round
• GreenLine, which secured $275 million in a Series A
• Infra.Market, closing a $222 million Series F

These transactions underline a clear trend: funding is still available, but it is moving towards companies building in critical and capital-intensive sectors such as electric mobility, infrastructure, and climate-focused logistics.

Bengaluru and Delhi Lead India’s Funding Geography

Bengaluru remained the top startup funding destination, accounting for 26% of total funds raised in H1 2025, followed closely by Delhi NCR at 25%. The narrowing gap between the two hubs reflects the growing regional diversification of India’s innovation economy.

This shift is aligned with national priorities of fostering entrepreneurship beyond traditional metros, and highlights how Delhi-based startups—particularly in B2B, fintech, and D2C—are closing the capital gap with Bengaluru’s tech-driven ecosystem.

Investor Activity Highlights Early-Stage Momentum

The top investors during this period, according to Tracxn, were LetsVenture, AngelList, and Accel. Their presence signals a robust early-stage deal flow and rising activity from syndicates and angel networks at a time when large institutional investors are taking a more cautious approach.

These investors are playing a pivotal role in sustaining the pipeline of innovation, especially as founders focus more on capital efficiency, revenue models, and long-term growth rather than fast-scaling at high burn.

What It Means for Startups

For Indian startups, the funding landscape is no longer about chasing headline-grabbing valuations. It is about demonstrating sustainable business fundamentals and sectoral depth.

Startups must now:

• Prioritize unit economics and manage burn rates
• Extend runways through operational efficiency and prudent hiring
• Build for underserved markets, especially in Tier 2 and Tier 3 regions
• Align with national and global priorities, such as sustainability, infrastructure, and digital inclusion

In short, startups must focus less on how much they raise and more on what they build.

What It Means for Funders

For investors, the H1 2025 funding trend is a signal to deepen conviction and shift focus from hypergrowth models to scalable, resilient businesses.

Funders should:

• Double down on early-stage bets with clear value propositions
• Support startups beyond capital, including governance and market access
• Diversify portfolios across sectors such as climate tech, EV, logistics, SaaS, and Bharat-focused platforms
• Look beyond metros, tapping emerging entrepreneurial talent in non-traditional cities

H1 2025 Indian Startup Funding Highlights

(Source: Tracxn)

India’s Funding Climate: A Reset, Not a Retreat

While the numbers reflect a decline, they also represent a necessary correction in the market. This phase is less about downturns and more about a shift in expectations—from scale-at-all-costs to sustainable innovation.

India’s continued position in the global top three, despite reduced capital flow, suggests that its startup ecosystem has entered a new phase of grounded growth. The funding may have slowed, but the ambition, talent, and structural support remain intact.

TICE Startup Funding Index is a curated segment on TICE News tracking startup investment trends, founder capital strategies, and investor insights across India. Stay tuned for in-depth analysis, sector-wise breakdowns, and founder-focused reporting.