TICE Funding Index: Startup Deals Shrink as Investors Hold Back

After a brief flicker of optimism in August, India’s venture capital (VC) funding momentum has once again slowed down, slipping back into the muted territory that has defined much of the past few months. For the week of September 6–12, Indian startups collectively raised $146 million across 20 deals—a dip from the $166 million recorded the previous week.

This week’s numbers reflect a larger story that has been playing out since July: the steady cooling of startup investments. Deal activity remains sluggish, and the absence of large-ticket transactions has kept the weekly inflow hovering around the $100-million mark.

Interestingly, two weeks in August stood out, when funding briefly crossed the $300-million range, but that proved to be more of an exception than a sign of turnaround. Since then, the graph has consistently sloped downwards, reaffirming that investors remain cautious in the current climate.

Investors Taking Selective Bets

The highlight of this week’s funding activity was interior design and tech firm Flipspaces, which closed a $50 million round led by CE-Invests, Panthera Growth Partners, and SMBC Asia Rising Fund. This deal alone accounted for a third of the week’s total funding and provided some lift to an otherwise subdued landscape.

Beyond Flipspaces, other notable raises included:

• Unico Housing Finance (Chennai-based): Raised ₹120 crore (~$13.6 million) from Anicut Capital and UC Impower.

• Trufrost & Butler (manufacturing startup): Secured $7 million from Carpediem Capital.

Unlike previous periods where a particular sector dominated the inflows, this week’s funding was spread across different stages and verticals, indicating that investors are making highly selective bets. There is no clear “theme” driving investments right now—be it fintech, SaaS, or AI—which reflects a broader wait-and-watch approach in the ecosystem.

Why the Slowdown?

The slowdown isn’t due to a lack of capital. In fact, VC funds continue to raise money every week. But much of that “dry powder” is being held back, waiting for the right signals before being deployed. A significant portion of capital is also being channelled into supporting existing portfolio companies that have shown resilience and growth, rather than being poured into fresh bets.

The reasons for this cautious stance are multi-fold:

• Global uncertainty: A fragile macroeconomic environment has made investors wary of aggressive new bets.

• Trade treaty concerns: The market is watching closely as India negotiates its trade agreements with the United States, a factor that could significantly influence investor confidence.

• AI gap in India: While the U.S. VC landscape is currently buzzing with massive bets on AI startups, India has yet to see a comparable surge. The lack of a strong AI investment wave locally has also kept funding momentum muted.

For founders, this environment is testing resilience. Those already in the game are having to sharpen their focus on unit economics, sustainability, and profitability rather than chasing growth at all costs. Investors, meanwhile, are in no rush to deploy capital, preferring to wait for macroeconomic clarity and stronger conviction in new-age sectors.

While the funding winter may not be as harsh as it was in 2022, the muted inflows signal a cautious season for Indian startups. Unless large-ticket deals return or a strong investment theme emerges, weekly numbers are likely to hover in this subdued range for the foreseeable future.

Still, the steady, if unspectacular, flow of capital proves one thing: the ecosystem isn’t drying up—it’s merely on pause. And when the next wave of conviction comes, India’s startup story may yet find itself back in full throttle.