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Entrepreneur
2 days ago
- Business
- Entrepreneur
Early-Stage Funding Dips, but Optimism Grows in India's Maturing Startup Ecosystem
Only two unicorns emerged in H1 2025, a 33% decline from three unicorns in H1 2024. Does the lack of early-stage funding mean fewer unicorns? Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. The road towards a USD 7 trillion economy by 2030 does not seem too difficult for India, given how the Indian startup ecosystem has drastically transformed the face of the Indian economy. Behind flourishing startups, there are two important pillars, one is innovative ideas that cater to Indian needs, and the other is the capital that enables these ideas to reach the market. However, in the first half of 2025, we have seen turbulence in the funding ecosystem. According to Tracxn's recent report, India's tech startup ecosystem raised USD 4.8 billion, a 25 per cent decline from H1 2024 and a 19 per cent drop from H2 2024. Why is the market witnessing such a deep dip in funding? Overall dip in funding Seed-stage funding declined to USD 452 million, a 23 per cent fall from USD 584 million in H2 2024 and 44 per cent lower than USD 802 million in H1 2024. Early-stage startups raised USD 1.6 billion, a decrease of 6 per cent from USD 1.7 billion in H2 2024, and down 16 per cent compared to USD 1.9 billion in H1 2024. Meanwhile, late-stage funding stood at USD 2.7 billion, marking a 25 per cent decline from USD 3.6 billion in H2 2024 and a 27 per cent drop compared to USD 3.7 billion in H1 2024. But for Brijesh Damodaran Nair, Managing Partner, Auxano Capital, this decline is a sign of maturity in the startup space. "The sharp decline in seed and early-stage funding reflects maturity in the space. The VCs and the ecosystem are becoming more selective, preferring to deploy dry powder into scale-ups with clearer paths to profitability and with adherence to governance and data-backed numbers," says Nair. However, Arjun Malhotra, General Partner, Good Capital, believes that the market is flooded with similar ideas. "A big factor is the explosion of AI — it has unlocked a lot of new market opportunities, but it's also led to a flood of similar or overlapping ideas. Founders are often building in the same spaces, which makes it harder to differentiate. As a result, investors are taking more time to evaluate what will truly stand out and scale," notes Malhotra. He also adds that AI has made it possible to do more with fewer resources, so early-stage companies don't need as much capital upfront, which naturally slows the pace of early funding rounds. But Anil Joshi, Founder and Managing Partner, Unicorn India Ventures & VC Council member, IVCA, shares a different perspective. "The drop in seed and early-stage funding this year is more cyclical than structural. Several micro-VCs and early-stage funds have closed new rounds recently, but many are still in the process of deploying fresh capital. On the founder side, we're also seeing a shift. Some entrepreneurs are choosing to bootstrap longer to build stronger traction and negotiate better valuations. It's not that capital isn't available, but both investors and founders are being more deliberate. This temporary dip is likely to correct itself as new funds start deploying more actively in the coming quarters," Joshi says. Where have the unicorns gone? Additionally, the market has also seen a dip in unicorns. Only two unicorns emerged in H1 2025, a 33 per cent decline from three unicorns in H1 2024. Does the lack of early-stage funding mean fewer unicorns? "Not necessarily. If anything, we might actually see more startups emerge because it's easier and cheaper to build today, thanks to AI. What will be interesting is to see which companies break out, given how crowded certain use cases have become. Success will likely come down to who can execute better, move faster, and carve out a truly differentiated space. So while the unicorn count might slow in the short term, the overall startup ecosystem could actually get more dynamic," explains Malhotra. Adding to this, Joshi says, "A dip in early-stage funding doesn't automatically translate into fewer successful startups or unicorns down the line. Many founders are choosing to stay bootstrapped longer, focusing on product–market fit and customer growth before raising capital. This often helps them command better valuations when they do raise. While the overall pace of funding has slowed, we expect activity to pick up as more funds begin deploying capital. Predicting the number of unicorns is always tricky, but the pipeline of high-quality startups remains strong." Meanwhile, Abhishek Prasad, Managing Partner, Cornerstone Ventures, adds, "I don't think this will affect the number of unicorns or successful startups in the future, as it will only ensure lower failure rates. We are, in fact, moving into a more positive phase in India's VC industry, where more thematic investing will lead to much better outcomes and stronger realisation for investors in India's startup story." Logistics tech bucked the trend In an interesting development, Logistics Tech emerged as one of the leading sectors in terms of performance in H1 2025, alongside Transportation, Retail, and Enterprise Applications. The Transportation and Logistics Tech sector saw a strong recovery, raising USD 1.6 billion, a 104 per cent increase from USD 799.3 million in H2 2024 and a 54 per cent rise from USD 1.1 billion in H1 2024. What contributed to the growth in this sector? "Several elements contribute to the return of investor confidence in India's logistics sector. An important role has been played by government initiatives like the National Logistics Policy and the 2025–2026 Budget. These policies emphasise tax incentives, digitisation, and infrastructure development. Demand in manufacturing, retail, and e-commerce continues to grow. This has highlighted the need for technologically enabled automated supply chains that include sophisticated storage. As a result, investors are backing more companies offering scalable and complex logistics solutions. The recovery mirrors the strong long-term prospects of the industry and the vital role it plays in India's economic development," says Bir Singh, Co-founder, Addverb. On the other hand, Dhruvil Sanghvi, CEO & Founder, LogiNext, believes that inefficiencies continue to cost businesses 3–5 per cent of revenues annually. "Investors are now doubling down on platforms solving these inefficiencies at scale. What's changed is clarity. AI-powered logistics platforms are now proven to reduce delivery costs by 15–20 per cent, improve SLA adherence, and create operational visibility. In a capital-disciplined environment, that's a compelling value story." What will revive early-stage funding? For a prosperous startup ecosystem, early-stage funding remains a lever that brings the initial stage of a startup to market. So, what will revive early-stage funding? Joshi says, "India's macroeconomic outlook remains strong, and that's a good foundation. What the early-stage ecosystem needs now is greater momentum on exits—IPOs, secondary sales, and strategic acquisitions. These events bring confidence back into the market and encourage LPs to back new funds, which in turn fuels early-stage investing. We're already seeing signs of recovery, and with a few high-quality listings or successful exits, the sentiment could shift quickly." Sunil K Shekhawat, CEO of SanchiConnect, believes, "Expanding angel networks in Tier 2 and Tier 3 cities and activation of capital from SME/family office books will diversify deal flow. Additionally, strengthening incubators and DeepTech accelerators with dedicated commercialisation and investor-readiness programmes is essential." While concluding, Damodaran says, "To revive early-stage momentum, the ecosystem needs lower entry barriers for angel investors, swifter regulatory clearances, and more active participation from domestic institutional capital, along with adherence to governance requirements. More local success stories and stronger exits can definitely restore confidence and convince investors that backing early-stage tech in India is an opportunity not to miss."
Business Times
5 days ago
- Business
- Business Times
Sygnum is sole new unicorn from South-east Asia in H1 2025: report
[SINGAPORE] Digital asset group Sygnum has emerged as the sole new unicorn from South-east Asia in the first half of 2025, data platform Tracxn said in a report released on Thursday (Jun 26). The Singapore-based firm attained unicorn status in January 2025, after three rounds of funding and a total of eight investors before its unicorn round. Tech funding in South-east Asia reached US$2 billion in H1 2025, boosted by late-stage funding deals. This was 7 per cent higher than US$1.8 billion in the year-ago period, but 24 per cent less than US$2.6 billion in H2 2024. 'These figures reflect both a short-term slowdown and a longer-term recovery trend in the regional market,' noted the report. H1 2025 was marked by more late-stage funding deals and a rise in mega-round activity, contrasting with a general slowdown in early and seed-stage investments, the report added. Seed-stage investments fell 68 per cent to US$87 million from US$270 million in H1 2024. Likewise, early-stage funding also declined 53 per cent to US$464 million from US$991 million. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up On the other hand, late-stage funding jumped 149 per cent to US$1.4 billion from US$562 million. There were five rounds of funding worth more than US$100 million in H1 2025, compared to just two rounds in H1 2024. Tech firms in Singapore accounted for 92 per cent of all funding seen across South-east Asia in H1 2025. Taguig, a city in the Philippines, trailed far behind in second. The report noted that the 'significant role' of Singapore as a funding hub, combined with strong activity across acquisitions and initial public offerings (IPOs), underscores the region's resilience and evolving role in the global technology landscape. The study pointed out three industries as the top-performing sectors. Enterprise infrastructure was the highest, attracting US$859 million in funding, a huge jump from just US$22.1 million raised in H1 2024. This was followed by fintech, with US$775 million raised – a 26 per cent decrease compared to the year-ago period. The enterprise applications sector rounded out the top three, raising US$545 million in H1 2025, about a third higher compared to US$409 million in H1 2024. 'The dominance of enterprise infrastructure, fintech and enterprise applications highlights growing investor focus on scalable and impact-driven sectors,' the report noted.
Business Times
5 days ago
- Business
- Business Times
S-E Asia tech funding hits US$2 billion in H1 2025, yields unicorn in Sygnum: Tracxn
[SINGAPORE] Digital asset group Sygnum has emerged as the sole new unicorn from South-east Asia in the first half of 2025, data platform Tracxn said in a report released on Thursday (Jun 26). The Singapore-based firm attained unicorn status in January 2025, after three rounds of funding and a total of eight investors before their unicorn round. Tech funding in South-east Asia reached US$2 billion in the first half of 2025, boosted by late-stage funding deals. This was 7 per cent higher than US$1.8 billion in the year-ago period, but 24 per cent less than US$2.6 billion in H2 2024. 'These figures reflect both a short-term slowdown and a longer-term recovery trend in the regional market,' noted the report. The first half of 2025 was marked by more late-stage funding deals and a rise in mega-round activity, contrasting with a general slowdown in early and seed-stage investments, the report added. Seed-stage investments fell 68 per cent to US$87 million from US$270 million in H1 2024. Likewise, early-stage funding also declined 53 per cent to US$464 million from US$991 million. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up On the other hand, late-stage funding jumped 149 per cent to US$1.4 billion from US$562 million. There were five rounds of funding worth more than US$100 million in H1 2025, compared to just two rounds in the first half of 2024. Tech firms in Singapore accounted for 92 per cent of all funding seen across South-east Asia in the first half of 2025. Taguig, a city in the Philippines, trailed far behind in second. The report noted the 'significant role' of Singapore as a funding hub, combined with strong activity across acquisitions and IPOs, underscores the region's resilience and evolving role in the global technology landscape. The report pointed out three industries as the top-performing sectors. Enterprise infrastructure was the highest, attracting US$859 million in funding, a huge jump from just US$22.1 million raised in the first half of 2024. This was followed by fintech, with US$775 million raised – a 26 per cent decrease compared to the year-ago period. The enterprise applications sector rounded out the top three, raising US$545 million in the first half of 2025, about a third higher compared to US$409 million in H1 2024. 'The dominance of enterprise infrastructure, fintech and enterprise applications highlights growing investor focus on scalable and impact-driven sectors,' the report noted.
Time of India
25-06-2025
- Business
- Time of India
India ranks 3rd globally in tech startup funding
Bengaluru: India emerged as the third-highest funded country globally for tech startups in the first half of 2025, raising $4.8 billion despite a slowdown in overall investment activity, according to Tracxn's India Tech Semi Annual Funding Report for the first half of the current calendar year. The total was 25% lower than the $6.4 billion raised in the same period a year ago and down 19% from $5.9 billion in the second half of last year. The US and the United Kingdom led global rankings, with India moving ahead of Germany and Israel from its fourth-place position in H1 2024. Tracxn's data showed a broad slowdown across investment stages. Seed stage funding fell to $452 million in H1 2025, down 44% year on year, while early-stage funding declined 16% to $1.6 billion. Late-stage investment dropped 27% from H1 2024, to $2.7 billion. Even amid tighter conditions, the period witnessed five $100 million plus funding rounds. Electric mobility company Erisha E Mobility raised $1 billion, followed by GreenLine ($275 million), ($222 million), Spinny, and Darwinbox. These investments came largely in transportation and logistics, retail, and construction technology, sectors that led activity in the first half of the year. You Can Also Check: Bengaluru AQI | Weather in Bengaluru | Bank Holidays in Bengaluru | Public Holidays in Bengaluru "The funding volumes have come down compared to the previous year, but India's tech ecosystem continues to show resilience and maturity. Strong interest in transportation, retail, and enterprise tech signals investor conviction in solving large, structural challenges," said Neha Singh, cofounder of Tracxn. The transportation and logistics tech segment surged 104% from H2 2024 to $1.6 billion, making it the best performing sector. Retail secured $1.2 billion, rising 25% from H2 2024 despite being down 32% year on year. The enterprise applications segment drew $1.1 billion, a 21% drop from H2 2024. The first half of 2025 also saw increased M&A activity, with 73 acquisitions compared to 54 in H1 2024. The largest transaction was Magma General Insurance's $516 million sale to DS Group and Patanjali Ayurved, followed by HUL's $350 million acquisition of skincare brand Minimalist. Bengaluru accounted for 26% of total funding in the period, followed closely by Delhi with 25%. In terms of investment activity, LetsVenture, AngelList, and Accel emerged as the top investors across stages. At the seed level, the top active firms were Venture Catalysts, 100XVC, and Antler, while Peak XV Partners, Accel, and Lightspeed Venture Partners led early-stage activity. Late-stage investment was dominated by Sofina, Premji Invest, and SoftBank Vision Fund. "The quality of IPOs and landmark acquisitions reflects the ecosystem's ability to create long-term value," Singh said. "The resilience we've observed in the first half of 2025 is a strong signal of where India's tech sector is headed next."
New Indian Express
25-06-2025
- Business
- New Indian Express
Start-up funding declines 25% in first half of 2025
The start-up funding landscape across different stages continues to show a downward trend as start-ups raised only $4.8 billion, a 25% year-on-year (YoY) decline in the first half of 2025 compared to $6.4 billion in January-June 2024. This funding in H1 2025 is about 19% lower compared to July-December 2024 ($5.9 billion). According to market intelligence platform Tracxn's India Tech Semi-Annual Funding Report H1 2025, seed stage funding dropped by 44% to $452 million compared to $802 million in H 1 2024. Early-stage and late-stage funding too declined 16% y-o-y and 27% YoY, respectively. The first half of this year witnessed only five 100 million+ funding rounds when compared to 9 such rounds in H2 2024 and 10 in H1 2024. This slowdown in funding is attributed to various factors including the present macro-economic environment. Neha Singh, co-founder, Tracxn, said, 'While the funding volumes have come down compared to the previous year, India's tech ecosystem continues to show resilience and maturity. Strong interest in sectors like transportation, retail, and enterprise tech signals investor conviction in solving large, structural challenges." About 12 start-ups went public in the first half of this year compared to 21 in H1 2024. This includes Ather Energy, Tankup, SS Innovations International and Infonative Solutions. Also, two unicorns emerged in H1 2025, compared to three unicorns in H1 2024. With 26% of the overall funding, Bengaluru emerged as the leader in total funds raised during this period, followed by Delhi at 25%. Interestingly, the report points out that out of the 89 unicorns (out of a total of 119) which disclosed their financials as of March 2024, only 26 unicorns were profitable. FinTech and Retail unicorns such as Zerodha, CoinDCX, OfBusiness, and Oxyzo are leading in profitability. H1 2025 witnessed 73 acquisitions compared to 54 acquisitions in the year-ago period. The most notable acquisition was Magma General Insurance, acquired by DS Group and Patanjali Ayurved for $516 million, followed by Minimalist, acquired by HUL for $350 million. The report also highlights that Bengaluru dominates with $50 billion in unicorn funding, followed by Gurugram with $13.1 billion in funding, primarily in the gig economy sector.
