Investment in Indian startups declined 8.3% in 2025, making India the only market among the global “Big Five” startup ecosystems to record a year-on-year contraction, according to a report by Vestd India based on data from business intelligence platform Crunchbase.
The report said funding activity remained weak in early 2026, with 560 funding rounds recorded in the first quarter, compared with 668 in the corresponding period of 2025 and 1,049 in Q1 of 2024.
India recorded 2,497 funding rounds in 2025, trailing the U.K., which logged 3,331 deals.
Early-stage funding hit
The decline was led by a sharp fall in early-stage investments.
Seed funding dropped 31.8%, angel investments declined 25.3%, and pre-seed deals fell 21.9%, indicating investors are becoming more selective and demanding stronger business fundamentals before committing capital.
In contrast, investment in mature companies gathered pace.
Secondary market deals rise
Secondary market deals rose 77.2%, post-IPO debt increased 45.7%, and Series C funding grew 27.6%, reflecting a shift towards established businesses and liquidity events. The report also noted that deal activity in the second half of 2025 was 11.8% lower than in the first half.
Leadership comment
Vestd Founder and CEO Ifty Nasir said, “India’s investment market is evolving rapidly. What we’re seeing is a clear shift away from high-volume early-stage speculation towards a more disciplined, fundamentals-driven environment.”
“Capital is still available, but investors are being far more selective and are increasingly backing businesses that can demonstrate resilience, profitability and long-term value creation,” he said.
Global trends
Despite the slowdown, India remained the world’s third-largest hub for emerging unicorns, with 43 companies valued between $500 million and $1 billion, behind the U.S. (239) and China (44), but ahead of the U.K. (27). However, it was the only top-three market to witness a 6.5% decline in its emerging unicorn pipeline.
The report said global investment was increasingly flowing into deep-tech sectors, with artificial intelligence leading growth in emerging unicorn formation, followed by data and analytics, and science and engineering.