April 22, 2025 — Startup Funding by Venture capital in India took a steep dive last week, recording the second-lowest weekly total in 2025 so far. Indian startups collectively raised just $62 million across 23 deals during the third week of April — a staggering 70% drop compared to the previous week’s $209 million.
This is only the third instance this year where VC inflow has dipped below the $100 million mark, indicating deepening investor caution. The only lower weekly figure was noted in the first week of January when funding plummeted to just $14 million.
Macroeconomic Turmoil Weighs Down Indian Startup Funding
The drastic dip in Indian startup funding reveals the fragile state of investor sentiment, shaped by a complex web of global macroeconomic uncertainty, geopolitical tensions, and a sluggish domestic economy. Ongoing trade disputes and tariff challenges have only added to the cautious approach being taken by venture firms.
“External volatility coupled with a palpable internal slowdown is hampering both deal flow and ticket sizes,” said a Delhi-based early-stage investor, speaking on condition of anonymity.
Startup Funding: Key Funding Highlights Amid the Slump
Despite the downturn, a few standout deals were recorded:
- Garuda Aerospace, a drone technology company, secured ₹100 crore (~$11.6 million) in a round led by Venture Catalysts.
- OfBusiness, a B2B commerce platform, also raised ₹100 crore (~$11.6 million) from Cornerstone Ventures.
- Optimized Electrotech, operating in the deeptech space, bagged $6 million from Blume Ventures and Mela Ventures.
- Magma, a B2B platform, secured $5 million in a multi-investor round that included Capria Ventures, General Catalyst, Accion Venture Lab, WEH Ventures, and Avinya Ventures.
Interestingly, only two startups crossed the $10 million mark in funding this week — a sign of significant downscaling in capital deployment.
Long-Term Optimism Still Alive: Fintech IPOs Hold Hope as Startup Funding Craters
While the current funding freeze may persist in the near term, the long-term outlook remains cautiously optimistic. Industry veterans point to structural growth indicators such as the IPO preparations by leading fintechs like PhonePe and Razorpay, both of which are moving toward public listings — a necessary milestone to revive investor confidence.
However, the industry also faced a reputational jolt due to controversies surrounding mobility startup BluSmart, casting a shadow over the otherwise ambitious growth narrative.
Outlook Ahead for the startup funding in India
With no signs of an imminent turnaround, experts suggest that Q2 2025 may continue to reflect weak investor sentiment, barring any macroeconomic improvement or government-driven stimulus.
Yet, for those looking beyond the near-term turbulence, India’s large digital consumer base, enterprise tech innovation, and expanding fintech footprint offer rays of hope.
