The domestic startup ecosystem is expected to rebound with fresh approaches in key sectors such as content, media, fintech, and marketplaces. The venture capital ecosystem has seen significant developments in India and globally. Here are three major highlights:
1.
The COVID bull run of investing started in 2021 and peaked in 2022. The venture markets froze in late 2022 and 2023, but this period of thaw is coming to an end in 2024. With interest rates beginning to decline and elections in both India and the US concluding, this should mark a new period of organic growth in venture investments.
2. The Indian IPO market has remained strong, resulting in an abundance of domestic capital. Zomato reached new heights, instilling confidence in the ability of Indian consumer companies to deliver profits.
The IPO pipeline is robust, with both large and small companies participating. Funds have been successful in raising domestic capital, although individual investors from 2021 have largely stayed away. 3.
After the initial ChatGPT-fueled euphoria, the tedious but exciting work of solving real problems with AI has begun. More enterprises are experimenting with AI solutions, and startups are beginning to innovate full-stack business models. This trend should build momentum over the next 2-3 years.
Looking ahead in 2025:
1. The tech job market remains challenging, with significant productivity gains reducing hiring needs. This environment is driving more talented individuals toward entrepreneurship, improving the quality of founders.
Seed investors are likely to find a steady flow of strong teams. 2. Venture activity is expected to pick up organically across all stages—Seed, Series A, B, and C.
Some global funds that have been absent are likely to return. 3. The price correction for 2021/2022 companies is 60-70% complete and should be fully resolved by the first half of 2025.
This will mark the end of investor pain from the excesses of those years. 4. IPOs are expected to drive further consolidation in India, as IPO currency enables acquisitions across sectors.
Listed companies have begun acquiring smaller firms, and this trend is likely to grow, creating a healthier liquidity market for domestic companies. The impact of AI:
1. AI gains will become increasingly visible, leading to significant momentum over the next few years.
This will initially disrupt the most obvious industries and gradually expand to others. 2. Domestic companies have been slower to adopt new technologies, potentially making them less competitive against global players in tech-first sectors.
3. Globally, funding for non-AI software is expected to become nearly impossible. Startups that have not pivoted to AI solutions should do so immediately.
2025 is poised to witness a more robust capital environment, better-quality entrepreneurs, and an AI-driven market driving new efficiencies. This should create fertile ground for new investment opportunities across the board.
Indian startups look forward to resurgence
In the dynamic world of Indian entrepreneurship, listing a company on the stock exchange has emerged as a crucial milestone, according to Accel’s Kirani. This trend reflects the evolving ambitions and growing confidence among Indian entrepreneurs. Accel, a prominent venture capital firm, has been closely observing this shift.
“Taking a company public is now seen as a significant achievement and a testament to the company’s growth and stability,” said Kirani. This movement towards public listing is not only about raising capital but also about gaining credibility and expanding the business footprint. The benefits of listing a company are manifold.
It provides an avenue for companies to access a broader base of investors, enhances visibility, and often leads to better valuation. Moreover, it can be a powerful tool for branding and establishing a company’s market presence. The Indian entrepreneurial ecosystem has seen several successful public listings in recent years.
These public offerings have drawn both local and international investors, underscoring the global appeal of Indian businesses. Kirani believes this trend will continue as more startups mature and seek to leverage the advantages of being publicly traded. In conclusion, the shift towards public listing is setting a new benchmark for success among Indian entrepreneurs.
It represents not just an aspiration but a strategic move towards sustainable growth and increased market influence. Following last year’s startup IPO frenzy, the number of new-age public listings is expected to nearly double in 2025. This growth spans across sectors including fintech, e-commerce, quick commerce, logistics, and edtech.
After a series of successful public listings in 2024, the startup initial public offering (IPO) party is set to carry over into the new year. At least 25 new-age companies are expected to go public in 2025. New-age companies like Ather Energy, ArisInfra, Avanse, Aye Finance, BoAt, Bluestone, Cardekho, Captain Fresh, DevX, Ecom Express, Fractal, Infra.market, Innoviti, InCred, Indiqube, Ofbusiness, PhysicsWallah, PayU, Pine Labs, Ullu Digital, Shadowfax, Smartworks, Zappfresh, Zepto, and Zetwerk are likely to IPO in 2025.
“We will probably see another 10-20 companies, or even more, go public from the startup ecosystem in 2025,” Sandeep Singhal, co-founder and Managing Partner of WestBridge Capital, said. “This will be the year of maturity. Today, there are maybe 15 venture-backed companies that are public.
But when that number triples, and these companies start to show credible financials quarter-on-quarter, the whole ecosystem will get strengthened,” he added. Last year saw bumper listings from Swiggy, Ola Electric, and FirstCry. In 2025, the total fundraise amount is likely to increase further as more companies line up to tap the public markets.
This marks a notable recovery from the subdued years of 2022 and 2023, when just two and five startups respectively made their stock market debuts. The largest IPOs of 2025 are expected to come from startups such as a major contract manufacturer, SoftBank-backed companies, and fintech unicorns, each looking to raise $1 billion. Quick commerce leader Zepto, construction materials platform Infra.market, AI unicorn Fractal, and edtech startup PhysicsWallah are also among the major IPOs expected, each targeting around $500 million.
The fintech sector is set to dominate the IPO landscape, with as many as six companies set to go public. Investors suggest that IPO-bound companies demonstrating strong financial performance will attract significant investor interest. “The path to an IPO has become more deterministic for startups, with a clear list of dos and don’ts for all to follow.
Controlled burn, improving margins, greater operating cashflows, seasoned team members, disciplined forecasting, and budgeting are hygiene factors for any startup looking to IPO,” said Siddarth Pai, Founding Partner of 3one4 Capital, an early-stage venture capital firm. While companies like Infra.market, Aye Finance, Fractal, and OfBusiness have reported strong financials recently, others experiencing flat growth and mounting losses may have to do more before proceeding with their listing plans. Other notable names headed for stock market debuts include logistics firms Ecom Express and Shadowfax, as well as brands like Bluestone, BoAt, and CarDekho.
Companies aiming for modest IPOs such as Zappfresh and Smartworks may also find themselves doing well. As startups head towards the public markets, pre-IPO funding and secondary transactions, which drove a significant part of the funding growth in 2024, are set to rise in parallel. “Pre-IPO activity is likely to rise in 2025, serving not just as a valuation benchmark but as a strategic opportunity for investors to pare stakes and optimize IPO size,” said Gaurav Sood, Managing Director and Head of Equity Capital Markets at Avendus Capital.
For new-age companies to maintain the current momentum, the key will be to focus on “building sustainable businesses while reducing dependency on external capital,” noted Pai. Industry watchers believe that India’s long-term macroeconomic stability will drive venture capital and private equity investments in startups. “For patient capital, India offers a rare combination of systemic growth and a policy environment designed to amplify entrepreneurial activity, making it an essential locus for long-term investment strategies,” said David Wilton, Chief Investment Officer at homegrown investment firm Oister Global.
