India’s tech startups experienced a strong start to fiscal year 2025, raising $2.5 billion in the first quarter, according to a report released Monday. This funding surge, a 13.64% increase from the previous quarter and an 8.7% rise compared to Q1 FY24, solidifies India’s position as the third-largest startup investment hub globally, behind the United States and the United Kingdom.
Major Funding Highlights
The Tracxn Geo Quarterly India Tech Report highlighted noteworthy trends in funding distribution. Three startups, including Erisha E Mobility, Darwinbox, and Infra Market, each secured over $100 million, mirroring the previous quarter’s figures. Late-stage startups were the primary beneficiaries, attracting $1.8 billion, a significant jump from $1.3 billion in Q4 FY24. Early-stage startups secured $528 million, while seed-stage funding reached $157 million.
Delhi-based tech firms led the funding landscape, accounting for 40% of the total investments, followed by Bengaluru with 21.64%.
Accel, Blume Ventures, and Peak XV Partners emerged as the most active investors during Q1 FY25. Venture Catalysts, Unicorn India Ventures, and YourNest dominated seed-stage investments. Avataar Ventures and Sofina were top late-stage investors, with Accel, Peak XV Partners, and Vertex Ventures leading early-stage funding.
Top-Performing Sectors
The report identified auto tech, enterprise applications, and retail as the fastest-growing sectors, showcasing notable investment increases:
- Auto tech witnessed a funding surge to $1.1 billion, up from $214.6 million in Q4 FY24.
- Enterprise applications secured $650.7 million, reflecting a 21.94% rise from the previous quarter.
- Retail investments increased 21.67% to $481.5 million from $395.8 million in Q4 FY24.
IPOs & Unicorns
Six companies, including Nukleus, Maxvolt Energy, Volercars, and Harshil Agrotech, went public in Q1 FY25. However, the quarter saw no new unicorns, in contrast to the two formed in Q1 FY24.
Acquisitions
Mergers and acquisitions (M&A) activity also saw an uptick. The quarter recorded 38 acquisitions, marking a 15.15% increase from the previous quarter and a 40.74% rise compared to Q1 FY24. The largest deal involved DS Group’s and Patanjali Ayurved’s $516 million acquisition of Magma General, surpassing the $350 million Minimalist acquisition by Hindustan Unilever.
India’s startup ecosystem continues to strengthen, with increased investments, strong sectoral growth, and rising M&A activity, reaffirming its significant role in the global tech landscape.
