Funding momentum for early-stage Indian startups declines in the second quarter
India's early-stage startup funding activity took a dip in the second quarter of the year, as reported by our analysis. The decline was observed across transactions in the angel, pre-seed, seed, and pre-Series A stages.
The slowdown in early-stage startup funding was primarily due to a significant reduction in private equity and venture capital (PE-VC) investments. In Q2 2025, PE-VC firms invested $5.3 billion across 248 deals, marking a 43% drop in investment value and a slight decline in deal count compared to $9.3 billion across 275 deals in Q2 2024.
The ongoing struggle for liquidity within India's venture capital ecosystem may have exacerbated the funding deceleration. Despite global startup funding trends showing growth in corporate-backed investments, especially driven by mega AI deals, the Indian market did not see a parallel rise in early-stage funding volume or value in Q2.
Notable startups that managed to secure early-stage funding during this period include Chai Bisket, Green Aero, LdotR, InPrime Finserv, WiseLife, Divine Hindu, Sai Parenterals, Linkrunner, and Monetize360.
In other developments, Counselect and Incuspaze inked Mergers and Acquisitions (M&As).
As we move forward, it will be interesting to see how the Indian startup ecosystem navigates these challenges and whether the funding activity picks up in the remaining quarters of the year. For more insights and analysis, consider becoming a Premium member for access to more articles.
[1] Global Startup Funding Trends Q2 2025 [2] PE-VC Investments Q2 2025 vs Q2 2024 [3] Liquidity Challenges in India's VC Ecosystem Q2 2025
Businesses looking to invest in India's startup landscape may want to carefully consider the decline in early-stage funding, as it occurred largely due to a reduction in private equity and venture capital investments. This slowed down the startup ecosystem significantly, with a 43% drop in investment value observed in Q2 2025 compared to the same quarter in 2024. Despite the growth in corporate-backed investments globally, especially in mega AI deals, this trend did not translate into an equivalent rise in early-stage funding volume or value in India.
