India has retained its position as the third-largest destination for tech startup funding globally in the first half of 2025, attracting a total of US $4.8 billion, according to a recent industry report. India’s venture capital investment has decreased by 25% in the first half of 2024 compared to the same period last year. However, this shows that India remains strong despite a slowdown in global venture capital.
Global Ranking Amid Funding Crunch
The global tech funding market is shrinking because of economic uncertainties, stricter monetary policies, and cautious investors. However, India is still performing well, ranking just behind the United States and China. India outperforms Germany, Israel, and the UK, which are usually strong in tech funding.
Contributors: Delhi, Bengaluru Lead the Charge
Among Indian cities, Bengaluru and Delhi-NCR accounted for over 50% of total tech startup funding, with 26% and 25% shares respectively. Mumbai, Hyderabad, and Chennai also contributed significantly, although funding deals outside of Tier 1 cities have seen a slight dip in momentum.
Sectors that continued to attract investor interest included:
- Fintech
- Deep-tech and AI
- Green energy
- EV and mobility solutions
Trends Shaping the Indian Startup Ecosystem
- Shift from growth to profitability: Investors are now more cautious, prioritizing sustainable unit economics and cash-flow visibility over blitzscaling.
- Emerging deep-tech and climate-tech startups are slowly replacing the consumer internet dominance.
- Government-backed initiatives like Startup India and state-specific startup policies have continued to support early-stage innovation.
Looking Ahead: A Strong Base Despite Short-Term Slump
Although the current funding drop may seem concerning, economists think it is merely a normal market adjustment and not a crisis. India is a long-term preferred location for venture capitalists and investors due to its large customer base, strong digital infrastructure, and expanding pool of IT expertise.
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