Venture capital (VC) funding into Indian startups declined by 11% in the first half of 2025 primarily due to lower number of high value transactions and added to this the uncertain external macro economic environment was another important factor.
The total VC funding for the first half of 2025 stood at $5.7 billion as compared to $6.4 billion in the similar period of 2024, reflecting a 11% decline, according to YourStory Research. Compared to the second half of 2024 where the total funding was $7.2 billion, the fall was even steeper by 21%.
This drop in funding for the first half of 2025 has come in despite the number of deals during this period remaining at similar levels. For example, the number of deals in the first half of 2025 was 621, while it was 655 in the first half of 2024. In the second half of 2024, the number of deals was 612.
The decline in funding has been primarily due to a lesser number of large deals i.e., those with a value of $100 million and above. In the first six months of the year, there were just eight startups who raised more than $100 million. The startups were Infra.market, Darwinbox, Leapfinance, Zolve, PB Healthcare, Porter, Udaan and Jumbotail.
It is actually these large value deals which power the overall funding momentum, and this has been missing in the first half of 2025. The other reason for this decline has been the volatile macroeconomic environment largely due to war-like tensions in the Middle East. In addition, the hardline stance on tariffs by the United States President Donald Trump has not really helped matters.
This volatile environment has created a sense of uncertainty among the minds of the investors. In addition, the advent of artificial intelligence (AI) has added to the uncertainty as investors are not sure what kind of impact this technology will have on the startups.
These developments have also reflected on the VC funding in the month of June 2025. The total amount raised in June stood at $1 billion as compared to $1.45 billion in May which was a 29% decline.
For the first half of 2025, the growth stage of funding saw the highest amount of funding at $1.9 billion followed by the early stage which was a tad lower at $1.8 billion. Late stage funding stood at $1.4 billion.
In terms of the sectors that raised funding in the first half of 2025, fintech led the group at $1.4 billion and in the second place came D2C brands at $0.7 billion. The fintech segment has consistently been the top draw for the investors.
The city of Bengaluru garnered the largest amount of funding in the first half of 2025 with $2.3 billion followed by Delhi-NCR at $1.4 billion and Mumbai at $1.2 billion. These three cities continue to dominate the startup landscape in the country. Other locations such as Chennai, Pune and Hyderabad have not really matched up to this level. This is the unfortunate reality of the Indian startup ecosystem and reveals that there is much to be done in terms of the roots going wider within the country.
Overall, the VC funding during the first half of 2025 does not provide a positive vibe for the Indian startup ecosystem and if this trend continues for the remainder of the year then the final figure is unlikely to surpass that of 2024. The hope is that the second half would turn out better.
Edited by Kanishk Singh
