India’s startup ecosystem continued its growth trajectory in the first quarter of 2025, securing $2.5 billion in funding and ranking third globally, behind the US and the UK, according to Tracxn’s latest Geo Quarterly India Tech Report. However, in a notable shift, Delhi surpassed Bengaluru in total funding for the quarter, marking a key change in the country’s startup landscape.While Bengaluru still recorded a higher number of deals, Delhi’s funding dominance was largely driven by strong IPO exits. Delhi-based tech firms accounted for 40% of all funding seen by tech companies across India. This was followed by Bengaluru accounting for 21.64%.“India has today become one of the largest ecosystems in terms of startup activity as well as funding activity,” said Neha Singh, Co-Founder of Tracxn. “Even if you look at the number of unicorn companies or late-stage companies valued at over a billion dollars, India is now the third-largest startup ecosystem.”
The report indicated that late-stage funding saw a surge, while early-stage investments declined. Singh attributed this to the strong pipeline of IPO-ready companies following a buoyant IPO market in 2024. “Many venture-backed companies went public last year, providing strong success stories. As a result, we now have a strong pipeline of mature companies looking to enter the IPO market,” Singh added.
Among the standout sectors in Q1 2025, auto tech experienced significant funding growth, primarily driven by the expansion of electric vehicles. Enterprise applications and B2B e-commerce also remained strong performers, while AI and quick commerce continued to attract investor interest.The report noted that AI funding in India has primarily focused on applications rather than infrastructure, and the quick commerce sector has grown with the success of Blinkit, Zepto, and Swiggy Instamart.The report also highlighted a sharp increase in mergers and acquisitions, with Q1 witnessing 38 deals, marking a 41% rise year-on-year. Notable deals included Hindustan Unilever’s acquisition of Minimalist, signalling a growing appetite for strategic takeovers.“This is overall positive for the startup ecosystem. It provides additional liquidity for investors, which could lead to more reinvestment into the VC ecosystem,” Singh added.Watch the accompanying video for the entire conversation.First Published: Mar 26, 2025 12:46 AM IST
