February 8, 2025: Indian startups have managed to secure strategic investments in specific sectors, despite the broader slowdown in venture capital (VC) funding, showcasing resilience and sectoral growth. The first week of February 2025 saw a total of $80 million across 20 deals—a solid achievement amidst global macroeconomic pressures.
Although the week’s figures fall short of the $192 million raised the week before, it’s important to recognize that some key sectors, particularly artificial intelligence (AI) and fintech, continue to attract significant investor interest, offering a glimmer of hope for the future.
The standout success stories of the week are the AI-focused startups Cognida.ai and TrueFoundry, both of which secured funding despite a generally cautious investment climate. These companies, though based in the US, are of Indian origin, underlining the global appeal of India’s AI talent. This reflects growing confidence in the potential of AI solutions and innovation from the Indian startup ecosystem, even as the overall funding environment tightens.
VC Funding Slowdown in Indian Startups: A Reflection of Global and Domestic Pressures
However, the overall decline in VC funding is hard to ignore. This week’s $80 million marks the second time this year that Indian startups have seen funding dip below the $100 million threshold, a stark contrast to the more substantial investments seen earlier. The previous week’s $192 million was supported by a few larger deals, which were noticeably absent in the latest round of funding.
The slowing Indian economy, compounded by the global economic uncertainty and upcoming trade tariffs from the US, has led investors to be more cautious. This cautious stance is not unexpected, given the ongoing challenges in both domestic and international markets.
The global focus on inflation, supply chain disruptions, and tightening financial conditions have left many VCs reassessing their strategies, causing the erratic funding flow in early 2025.
Smaller Deals Lead the Way: Key Investments in Digital Payments, Healthcare, and Personal Care
While large funding rounds have slowed, the week saw positive transactions in targeted sectors. Digital payments startup Cashfree Payments raised a notable $53 million from KRAFTON and Apis Growth Fund II, showcasing continued confidence in India’s rapidly growing fintech space.
Apex Kidney Care (AKC) secured $9 million, while personal care startup HairOriginals raised $5 million from investors including 12 Flags Consumer Holdings and Peyush Bansal. Women’s health startup Nua also raised Rs 35 crore (~$4 million) from Mirabilis Investment Trust and angel investors.
These smaller yet significant deals highlight the ongoing investor confidence in certain sectors like fintech, healthcare, and personal care. Investors are doubling down on these niches, betting on sustained growth even in uncertain times. The concentration of deals in these areas signals a targeted approach to funding, where investors are keen on backing startups that align with shifting consumer needs and technological advancements.
Public Startups Struggling: Path to Profitability Still Elusive
However, not all is rosy for Indian startups, particularly those that have gone public. In the third quarter of 2025, major public companies like Swiggy, Mobikwik, and Ola Electric posted losses, underlining the financial hurdles that even established firms face in the current economic environment. These results serve as a reminder that while the startup ecosystem continues to innovate, the road to profitability remains a long and challenging one.
Despite these hurdles, many startups are proving resilient, adapting to the changing market landscape with new strategies and offerings. The Reserve Bank of India’s recent repo rate cuts are expected to stimulate economic activity, potentially paving the way for a more favorable environment in the coming months.
Looking Ahead: Optimism Amidst Uncertainty
While the VC funding landscape may seem unpredictable in the short term, the silver lining is that sector-specific growth—particularly in AI, fintech, and healthcare—suggests that Indian startups are still seen as attractive investment opportunities. While there’s no immediate clarity on how the next few months will unfold for the Indian Startups, the ongoing interest in these high-growth sectors, combined with a supportive macroeconomic policy stance, offers hope for the future.
- Sector-Specific Growth: AI, fintech, and personal care startups continue to attract funding, even as overall VC investment slows.
- Strategic Investments: Investors are focusing on targeted, smaller deals in response to broader macroeconomic challenges.
- Challenges for Public Startups: Companies like Swiggy, Mobikwik, and Ola Electric struggle with profitability, highlighting the hurdles for even the largest players in India’s startup ecosystem.
- Economic Outlook: The Reserve Bank of India’s repo rate cuts provide hope for a rebound in the Indian economy, potentially easing funding constraints in the months ahead.
