India's vibrant technology startup ecosystem witnessed a significant contraction in equity funding during 2025, marking a reversal from the previous year's modest recovery. According to the latest data from market intelligence platform Tracxn, the cumulative equity funding for Indian tech startups stood at $10.5 billion. This figure represents a substantial 17% decline compared to 2024 and is also 4% lower than the $11 billion raised in 2023.
A Broad-Based Funding Slowdown
The report indicates that the funding decline was widespread across stages, though with notable variations. While early-stage funding demonstrated resilience with a 7% year-on-year increase, other stages faced sharp drops. Seed funding plummeted by 30%, and late-stage funding saw a significant 26% decrease compared to the previous year. The number of mega-deals also reduced, with only 14 funding rounds exceeding $100 million in 2025. This is lower than the 19 such rounds in 2024 and 16 in 2023.
Exit Activity and Sectoral Performance
Despite the funding dip, exit avenues showed mixed signals. The tech sector recorded 136 acquisitions, a 7% increase from the 127 seen in 2024, though still 11% below the 2023 tally of 153. A bright spot was the surge in public market exits. Tech sector IPOs jumped 17% to 42 in 2025, up from 36 in 2024 and marking a strong 62% rise from the 26 IPOs in 2023. Major public listings during the year included e-commerce platform Meesho, aerospace and consumer goods firm Aequs, and supply chain company Ravel. The year also saw the creation of five new unicorns, maintaining the same pace as 2024.
Neha Singh, co-founder of Tracxn, commented on the trend, stating that capital deployment has become more disciplined. "The sustained momentum in early-stage funding, rising IPO activity, and steady unicorn creation highlight a maturing ecosystem that is increasingly focused on building scalable, high-quality businesses," she said. "The growth in exits and continued investor interest across core sectors such as enterprise applications, retail, and fintech show a resilient startup market."
Top Sectors and Major Deals
The report identified enterprise applications, retail, and fintech as the top-performing sectors in terms of total capital attracted. However, even these leading segments were not immune to the broader downturn, each witnessing double-digit percentage declines in funding.
- Enterprise Applications: Secured $2.6 billion, a 17% decline from 2024.
- Retail: Attracted $2.4 billion, also down by 17%.
- Fintech: Raised $2.2 billion, experiencing a relatively milder 5% year-on-year drop.
The largest funding rounds of the year were driven by other high-potential sectors. Transportation and logistics tech, environment tech, and auto tech dominated the big-ticket deals. Notable rounds included a massive $1 billion Series D for Erisha E Mobility, a $300 million Series H for quick-commerce player Zepto, and a $275 million round for GreenLine in the environment tech space.
The data underscores a shift in India's startup investment landscape towards greater selectivity and a focus on sustainable business models, even as the foundational appetite for innovation, particularly in the early stages, remains strong.
