India’s VC Chill Deepens: Funding Slumps as Global Capital Warms Elsewhere

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India’s startup ecosystem may be entering a prolonged venture capital winter, with CY25 funding down 21% yearonyear to just $5.7 billion—on track to hit a fiveyear low. While global VC activity surges, India’s deal volume and ticket sizes continue to shrink, raising concerns about investor sentiment and sectoral stagnation.

Key indicators of the slowdown:

Only 653 deals were recorded so far in 2025, compared to 2,100 deals raising $30 billion in 2021.
The largest deal this year was $275 million by GreenLine Mobility, with no billiondollar rounds in sight.
Seedstage activity has dried up, with latestage rounds dominating the landscape.

Global contrast:

Q2 2025 global venture funding reached $94.6 billion, the secondhighest since Q2 2022.
Hard tech and AI companies led the charge, with Meta investing $14.3 billion in Scale AI and Elon Musk’s xAI raising $5 billion.
India contributed just 3% to global VC funding, missing out on the AI boom and hard tech momentum.

Investor behavior:

Risk aversion is rising, with fewer but larger bets in fintech and ecommerce.
Venture debt is gaining traction, with Rs 2,100 crore deployed across 130+ deals in H1 2025.
Domestic VCs are calling for contextdriven capital to back Indiaspecific innovations in agriculture, health, and infrastructure.

Unless the second half of 2025 sees a dramatic upswing, India’s startup ecosystem may face a cold, cautious funding climate well into 2026.

Sources: Fortune India, Financial Express, The Hindu BusinessLine, MSN India, Moneycontrol, Bain & Company.