VC funding in Indian startups declines 42% YoY in July

The Indian startup ecosystem continues to face the challenge of a slowdown in venture capital (VC) funding as July saw the lowest amount raised on a monthly basis for the year till now. This was primarily due to the absence of large-value deals.

The total funding for July 2025 was $621 million. Compared to $1,074 million in July last year, the decline was 42 per cent, according to YourStory Research. The dip was 41 per cent from the funding in the preceding month i.e., June 2025.

The amount of VC funding raised by the Indian startup ecosystem for July has been the lowest for the year till now. The second lowest amount raised for the year was in February when the amount was $669 million.

July has been quite lacklustre for Indian startups in terms of VC inflow. Even on a weekly basis, the total amount raised was just hovering around the $100-million range. This slowdown in funding is largely due to absence of large-value deals; July did not witness even one transaction with a deal value of more than $50 million.

It is the large value deals that make all the difference to the funding amount. Any change in this parameter has a bearing on the overall fund flow.

However, July also had a surprise—in terms of the number of deals. The total number of deals was 102 during the month compared to 91 in June, although the total funding raised was lower. This reveals that the number of deals is not as important a benchmark as the presence of high-value deals.

The first seven months of the year saw VC funding on a monthly basis crossing the important threshold of $1 billion only thrice—in March, May and June.

These developments do not augur well for the Indian startup ecosystem, and given the trend in the first seven months of the year, VC fund raise is unlikely to cross the $13.2 billion recorded in 2024.

During July this year, the early-stage funding category raised the highest amount at $262 million, across 79 deals, followed by the late-stage startups. This has been the trend for the last two years or so, wherein the early-stage category gets the highest traction in terms of number of deals but the value of such transactions remains low.

Among the sectors that received the highest funding in July, the fintech segment topped the list, followed by cleantech and D2C. The fintech segment has consistently maintained its position as the number one category receiving the highest investor interest.

The three key cities of Bengaluru, Mumbai and Delhi-NCR took the top three positions in terms of VC funding. This has been the trend for a long time. Other cities such as Chennai, Hyderabad and Pune have not reached the level of VC funding of these three locations.

Overall, the environment continues to remain gloomy as the uncertain macro economic environment has made investors cautious while investing in startups. The advent of artificial intelligence has added to the uncertainty—investors are in a wait-and-watch mode with regard to how this technology will play out, leading them to hold onto their cheques.