VC funding in Q1 2025 remains flat; Bengaluru startups get over $1B

Venture capital (VC) funding into Indian startups remained flat for the first three months (Q1) of 2025, as larger value deals declined during the period.

According to YS Research, Indian startups raised a total of $2.52 billion in VC funding in Q1 2025 across 312 deals, compared with $2.53 billion in the same period last year with 310 deals.

On a quarterly basis, funding declined 17.2% compared to Q4 2024 (October to December), where startups bagged $3 billion across 269 deals.

These developments reveal that more deals do not indicate a higher inflow of VC money and are a clear sign of large-value deals missing. The first quarter of 2025 saw just four large deals, where Infra.market, Darwinbox, Leap Finance, and Zolve raised funding with a value of $100 million and above.

The Indian startup ecosystem continues to face challenges, primarily due to an uncertain macroeconomic environment, including a slowing domestic economy coupled with volatile stock markets. Moreover, the tariff threats from US President Donald Trump are only leading to a difficult position.

Given this scenario, it is safe to assume that 2025 has not started on a positive note, but a change in momentum is expected in the forthcoming quarters.

This can be corroborated from the trends in the monthly VC funding into Indian startups. For the first time this year, monthly funding crossed the $1 billion mark. The total VC funding for March stood at $1.1 billion compared to $669 million in February and $712 million in January.

In Q1 2025, growth-stage startups raised the highest amount at $852 million across 26 deals, followed by the early-stage category at $805 million with 250 deals.

The early-stage category continues to gain traction with the highest volume of activity for the number of deals, but funding value remains low—a trend for the last two years and is only expected to continue.

In terms of sectors, fintech has been consistently topping the charts, receiving the highest share of VC funding at $808 million, followed by the D2C segment at $250 million, in Q1 2025.

In fact, the startup capital of India, Bengaluru, bagged the highest VC funding amount at $1.1 billion, followed by Mumbai at $519 million and the Delhi-NCR region at $446 million.

Unfortunately, a majority of startup activity continues to remain in these top three cities, while startups from other Indian cities need to catch up.

The overall funding situation does not give a positive signal for the Indian startup ecosystem, but it is expected that the VC firms, continuing to raise fresh capital, will deploy the funds soon.