India's Deeptech Funding Jumps 37% to $2.3 Billion in 2025, AI Takes Center Stage
Deeptech funding in India experienced a significant surge, rising 37% year-on-year to reach $2.3 billion in 2025. This growth outpaced the broader venture capital landscape, firmly establishing artificial intelligence as the primary driver of the country's startup ecosystem, as detailed in the latest Indian Tech Start-up Report by Nasscom and Zinnov.
Overall Tech Startup Funding and Market Maturity
Overall tech startup funding in India increased by 23% to $9.1 billion during the year, even as investors adopted a more selective and milestone-focused approach. The report highlights a strategic shift from "volume-driven expansion" to "execution-led maturity," with capital increasingly flowing towards validated ventures that are ready for commercialisation.
Deeptech Startup Landscape and AI Dominance
India is now home to over 4,200 deeptech startups, including more than 550 that were founded in 2025 alone. Artificial intelligence dominates this segment, accounting for 84% of deeptech startups and a staggering 91% of deeptech funding. The influence of AI extends across various sectors, including enterprise software, cybersecurity, defence, and industrial systems.
Insights from Industry Leaders
Rajesh Nambiar, president of Nasscom, commented on the ecosystem's evolution, stating that it has entered "a more disciplined phase of growth," with AI emerging as core infrastructure for the next wave of innovation. He emphasized, "This signals growing global confidence in India's ability to build, deploy, and commercialize AI at scale across sectors ranging from enterprise software and cybersecurity to defense and industrial systems."
Funding Concentration and Challenges
Despite the funding rebound, investments remained heavily concentrated in early stages. Nearly 74% of total deals in 2025 were at seed and early stages. However, a significant challenge persists, with about 85% of seed-stage ventures failing to progress to Series A within five years, highlighting a gap between proof-of-concept and scalable revenue generation.
Pari Natarajan, CEO of Zinnov, noted that the primary challenge has shifted from startup creation to conversion, underscoring the need for startups to demonstrate sustainable growth and market viability to secure further funding.
