February 23, 2025: VC Funding Round Up February 3rd Week: The Indian startup ecosystem is facing a challenging period as venture capital (VC) funding continues to be sluggish. For the third week of February, VC investments amounted to $147 million across 22 deals, a sharp decline from the $323 million raised the previous week.
The lack of substantial deals, with the largest transaction being Udaan’s $75 million, underscores the caution among investors in the face of an uncertain economic landscape.
The stark drop in funding reflects the growing difficulty Indian startups face in attracting large-scale capital. This week’s funding round was heavily skewed towards smaller deals, with many not exceeding $20 million. A significant portion of the capital came from early-stage funding, which remains the most active segment of the market.
However, despite the high deal volume of 20 early-stage investments, the total funding in this category was just $66 million. This underlines the persistent gap between early-stage optimism and late-stage capital attraction, which remains subdued.
VCs are clearly exercising caution, driven by global economic concerns and uncertain market conditions. The lack of larger investments this week highlights the ongoing hesitance among investors, who are wary of committing to larger sums without more clarity on the broader economic outlook.
While early-stage deals are still prevalent, it is the late-stage funding that drives the major growth in startup valuations, a segment that has yet to see any substantial improvements this year. Despite this, there are still significant movements within the ecosystem. One of the most significant developments is PhonePe’s announcement of its upcoming public listing, a milestone that could invigorate investor interest in the Indian startup space.
Early-stage VC funding remains the most active segment despite the slowdown
- Udaan, the B2B e-commerce giant, raised $75 million from M&G Plc and Lightspeed Venture Partners.
- Spyne, a deep-tech startup, secured $16 million from Vertex Ventures, Accel, Storm Ventures, and Alteria Capital.
- Waterfield Advisors, a wealth management firm, raised $14 million (₹122.99 crore) from Jungle Ventures and angel investors.
- Dogsee Chew, a pet food brand, raised $8 million from Ektha.com, Shivanssh Holdings, Poddar Family Office, and existing promoters.
- Rare Rabbit, an omnichannel fashion retailer, raised ₹50 crore (around $5.7 million) from A91 Partners.
- Probus Smart Things, another deep-tech startup, raised $5 million from Unicorn India Ventures.
With uncertainty prevailing over the broader economic direction, the startup ecosystem will likely continue to witness uneven funding inflows. Larger deals could return once the economic climate stabilizes, but for now, the focus remains on smaller, early-stage investments.
The outlook for the coming weeks will hinge on both the economic recovery and investor sentiment, with attention turning to significant announcements like PhonePe’s IPO to potentially reignite investor confidence.
