Funding in Indian tech increased by 8.7% in the first quarter of 2025 compared to the same period last year. Investors put in $2.5 billion during the January-March quarter, up from $2.3 billion in Q1 2024. However, the number of funding rounds declined by 59% to 237 during Q1 this year from 580 in Q1 last year, according to data from Tracxn.
The growth in funding value despite the drop in deal volume suggests investors are becoming more selective. They are focusing on businesses with stronger fundamentals, clear revenue models, a path to profitability, and proven traction rather than spreading investments thinly across many bets. Quarter-on-quarter, investment jumped 13% from $2.2 billion in Q4 2024, but deal volume dropped by 32% from 349 deals in the previous quarter.
Late-stage funding recorded $1.8 billion in Q1 2025, growing by 38.46% compared to $1.3 billion raised in Q4 2024. In contrast, seed stage funding saw a drop of 23.79% to $157 million in Q1 2025 from $206 million in Q4 2024, and a 55.77% decrease from $355 million in Q1 2024. Early-stage funding also dropped by 23% to $528 million in Q1 2025 from $692 million in Q4 2024, and by 52% from $1.1 billion in Q1 2024.
Neha Singh, Co-Founder of Tracxn, commented on the funding environment: “While the funding environment remains dynamic, India’s startup ecosystem continues to demonstrate adaptability and growth. Key sectors like auto tech, enterprise applications, and retail are attracting investor interest, and the rise in acquisitions signals a maturing ecosystem. Innovation and entrepreneurship remain at the core of this ecosystem, positioning India for long-term success.”
The top funding rounds in Q1 2025 were $1 billion raised by Erisha E Mobility, $140 million by Darwinbox, $121 million by Infra.Market, $75 million by udaan, and $70 million by InsuranceDekho.
Institutional investors such as Venture Catalysts, Unicorn India Ventures, and YourNest led seed-stage deal volume with four investments each. Peak XV Ventures and Vertex Ventures were most active in early-stage deals with three investments each.
Indian tech funding up in 2025
Delhi attracted the highest share of investments at 42% with $1 billion, followed by Bengaluru at 22%, Gurugram at 8%, and Hyderabad and Mumbai each with a 7% share. India’s startup ecosystem saw no new unicorns emerge in Q1 2025, reflecting increased investor caution. Venture capitalists prioritized late-stage companies with established business models over riskier early-stage startups.
Early and seed-stage funding also declined, signaling a more conservative investment climate amid economic uncertainties. Despite these challenges, India ranked as the third-highest funded country globally in Q1 2025, after the United States and the United Kingdom. The $2.5 billion raised represented a 13.64% increase from Q4 2024 and an 8.7% rise compared to Q1 2024.
Late-stage funding significantly contributed to this growth, surging by 38.46% quarter-on-quarter to reach $1.8 billion. Auto Tech experienced the highest growth, with investments soaring by 403.35% quarter-on-quarter to $1.1 billion. Enterprise Applications secured $650.7 million, marking a 21.94% increase from Q4 2024, while Retail funding reached $481.5 million, reflecting a 21.67% rise.
Acquisition activity increased in Q1 2025, with 38 acquisitions representing a 15.15% rise from Q4 2024 and a 40.74% increase from Q1 2024. The largest acquisition was DS Group and Patanjali Ayurved’s purchase of Magma General Insurance for $516 million, followed by Hindustan Unilever’s acquisition of Minimalist for $350 million. Delhi emerged as the top city for tech funding in Q1 2025, accounting for 40% of total investments, with Bengaluru following at 21.64%.
Accel, Blume Ventures, and Peak XV Partners were the most active investors overall. Accel led the early-stage funding segment, while Avataar Ventures and Sofina were the top late-stage investors. Venture Catalysts, Unicorn India Ventures, and YourNest were the leading seed-stage investors.
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