Indian Startup Funding Slows in 2025 Despite September Surge
The Indian startup ecosystem experienced a mixed bag of fortunes in the first three quarters of 2025. While funding surpassed the $1 billion mark in September, the overall investment trend showed a decline compared to the previous year.
The year began with a bang, as funding exceeded $1 billion in September for the second consecutive month, reaching $1.2 billion. However, the overall picture was less rosy. Venture capital funding into Indian startups dropped by 18% in the first nine months of 2025 compared to the same period in 2024. Startups raised $8.6 billion across 926 deals, down from $10.6 billion in the same period last year.
Breaking down the quarters, Q3 2025 witnessed a significant decline. Indian startups raised $2.8 billion, a 32% decrease year-on-year compared to Q3 2024. The numbers slipped sequentially too, marking a 12.5% drop from the second quarter of 2025. Despite this, Mumbai emerged as the top funding destination, followed by Bengaluru and the Delhi-NCR region.
Fintech continued to be the favoured sector among VCs, attracting the highest share of funds. D2C brands and healthtech startups followed suit. Late-stage startups drew the largest pool of capital, indicating investors' confidence in mature businesses. AI startups in India raised a modest $100 million in the same quarter.
Frankfurt, Germany, established itself as the main financing location for startups in Q3 2025, with several IPOs at the Frankfurt Stock Exchange, including the notable listing of Aumovio SE.
The final tally for 2025 is unlikely to surpass the 2024 funding volume of $13.6 billion, given the current trends. While the Indian startup ecosystem continues to attract significant investment, the pace has slowed compared to previous years. Despite this, the ecosystem remains resilient, with key cities like Mumbai and Bengaluru continuing to draw substantial funding.
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