Investors expect higher deal volume in 2025 driven by AI push: InnoVen Capital report
InnoVen’s recent report highlights momentum at the seed stage with cheque sizes scaling up to between $500K to $2 million.
Investors take an optimistic view of India’s funding landscape as higher early-stage cheque sizes and expected rise in deal volume indicate a shift from the cautious outlook of last year, venture debt firm InnoVen Capital noted in its ninth edition of the ‘Early-Stage Investment Insights Report’.
Of the 28 surveyed leading institutional early-stage investors, 64% of respondents expect deal volume to rise in 2025.
The report, which focused on investment activity across seed and pre-Series A stage, observed that average cheque sizes continued to rise with over 50% of deals falling between $500,000 to $2 million.
However, activity mimics large global trends with a focus on Gen AI gaining strong momentum, with 50% of investors surveyed already deploying capital in this segment. Other than Gen AI, sectors such as direct-to-consumer, deeptech, and business-to-business platforms have continued to attract capital, the report found.
“Investors have entered 2025 with stronger conviction, clearer filters, and deeper engagement with future-facing sectors like Gen AI. At the same time, they are prioritising team quality and early revenue traction more than ever before. This report reflects how early-stage investors are approaching 2025 with clearer priorities and more deliberate deployment strategies,” said Tarana Lalwani, Partner at InnoVen Capital India
At the same time, the report added that investors have become more selective. Just one in three investors funded pre-revenue startups highlighting the growing importance of profitability as a metric.
Investors’ perception towards capital has also shifted. Only 54% of investors believe that there is excess dry powder, lower than 84% in the previous year. As perception of capital supply shifts, exit expectations have also evolved, the report noted. Around 74% of investors now see secondary sales as the most likely path to exit, ahead of IPOs and M&As.
On VC-backed public listings, the report said that 50% of investors cited mispricing as the main reason that startups trade below their listing price.