India has emerged as the world’s third-largest destination for technology startup funding, according to fresh data released by market intelligence platform Tracxn. This puts the country behind only the United States and the United Kingdom, and ahead of Germany and France.
The milestone reflects the resilience and depth of India’s startup ecosystem, even as overall capital inflows cooled in 2025. Between January and September this year, Indian tech startups raised $7.7 billion, a decline of 23% year-on-year compared to $10.1 billion in the same period of 2024. The figure also trails the $8.3 billion recorded in 2023, underscoring a funding slowdown.
Funding Cools, Ranking Rises
While the overall dollar amount has dipped, India’s relative global position has strengthened. This paradox highlights the broader trend of global venture capital pullbacks. Investors are becoming more selective, but India’s ability to retain global attention has been attributed to strong fundamentals.
Neha Singh, co-founder of Tracxn, noted that India’s maturing ecosystem is offering multiple exit avenues for investors. “We are seeing rising acquisitions, steady IPO activity, and continued unicorn creation,” Singh said, emphasizing that these developments provide balanced outcomes for both founders and backers.
Deal Stages: Late-Stage Takes the Biggest Hit
The slowdown in funding was spread across deal stages, though late-stage startups bore the brunt.
- Seed funding totaled $727 million, down 39% year-on-year.
- Early-stage funding fell more modestly to $2.7 billion, marking a 10% decline.
- Late-stage startups witnessed the steepest pullback, with funding dropping 27% to $4.3 billion.
Another sign of the tightening environment was the sharp reduction in big-ticket rounds. Only 10 deals worth $100 million or more were closed in the first nine months of 2025, compared to 16 in 2024 and 15 in 2023. However, the median round size doubled to $1.5 million, suggesting that investors are concentrating their bets on fewer but higher-quality opportunities.
Where the Money Went: Enterprise Applications Dominate
Despite the slowdown, investor interest remained strong in sectors aligned with India’s digital transformation. Enterprise applications led the pack, attracting $2.3 billion in funding. The sector’s prominence reflects rising demand for cloud-based and AI-driven solutions across industries.
The retail sector followed closely with $2.0 billion, buoyed by the growth of e-commerce and omnichannel platforms. Meanwhile, transportation and logistics technology secured $1.79 billion, highlighting continued investment in supply chain digitization and mobility innovations.
According to Tracxn, these categories reinforce long-term investor confidence in India’s ability to build scalable solutions for global markets.
Stronger Exits and New Unicorns
One of the most encouraging signs in 2025 has been the strengthening of exit activity. A total of 110 acquisitions were recorded between January and September, up 15% from 96 acquisitions in the same period last year. Enterprise application companies were especially popular acquisition targets, underlining the appetite for cloud software and artificial intelligence solutions.
On the valuation front, India added four new unicorns in 2025, bringing the country’s total tally to 122 unicorns. While this number trails the US and China, it reflects a steady pipeline of high-growth companies breaking through into billion-dollar valuations.
Geography of Capital: Bengaluru Leads
In terms of geography, India’s tech capital Bengaluru maintained its leadership position, accounting for 31% of the total funding raised. The National Capital Region (Delhi) followed with 18%, while other hubs like Mumbai, Hyderabad, and Chennai continued to expand their share gradually.
The distribution underscores how India’s startup ecosystem is broadening beyond traditional hubs, though Bengaluru remains the epicenter of capital inflows.
The Signal Behind the Numbers
Taken together, 2025’s funding landscape paints a picture of compression at the top but recalibration underneath. Mega-deals have become fewer, yet smaller and mid-sized rounds are becoming more robust, with larger median cheque sizes signaling investor conviction in quality startups.
The ranking gain to No. 3 globally owes less to a surge of fresh capital and more to India’s resilience, diversity, and maturity. With steady exits, continued unicorn creation, and investor focus shifting toward enterprise-grade software and infrastructure, India is showing that it can weather cyclical funding downturns without losing long-term momentum.
For founders, the message is clear: while chasing mega-rounds may be tougher, building sustainable, enterprise-focused businesses is increasingly rewarded. For investors, India remains a strategic market, balancing growth opportunities with maturing exit pathways.
Outlook: A Tougher Yet Stronger Cycle
As the global venture capital environment continues to tighten, India’s startup ecosystem is signaling adaptability. The shift away from large late-stage bets toward selective early and enterprise-focused investments reflects an ecosystem recalibrating for quality.
With global uncertainties shaping funding decisions, India’s ability to maintain strong relative performance highlights its appeal as a long-term innovation hub. The coming quarters may remain challenging, but the broader signal is one of durability, breadth, and continued global relevance.
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Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
