Year in review: Early-stage AI reset financing for startups is flat in 2025

Indian startup funding remained almost flat in 2025, despite some improvement in growth-stage investments. Startups raised about $9.8 billion till December 15, slightly lower than the $10.1 billion raised in 2024, according to Venture Intelligence data. The main reason was fewer large funding deals and a more cautious approach by investors at the early stage.

However, venture capital investors stayed active, as IPO activity picked up and exits increased. According to Peak XV Partners’ managing director Mohit Bhatnagar, both new investments and exits happened this year, especially in areas like AI and consumer brands.

Several big funding rounds took place in 2025. Zepto raised $450 million, Rapido closed part of a $550 million round, Meesho raised $270 million, Groww raised $200 million, and MoEngage secured $280 million. These included both fresh investments and secondary transactions, where existing shareholders sold their stakes.

MoEngage CEO Raviteja Dodda said that for late-stage startups, investors now focus more on clear liquidity plans, mainly IPOs. He added that strong performance of Indian startup IPOs has increased investor confidence and made fundraising easier for quality companies.

In 2025, nearly a dozen startups went public, including Meesho, Lenskart, Groww, PhysicsWallah, Pine Labs, Ather Energy, Bluestone, and Urban Company, providing exits to early investors.

Early-stage funding (seed and Series A) slightly declined to $3.1 billion from $3.5 billion in 2024. Still, investors showed strong interest in AI startups, especially in enterprise software, developer tools, and automation. Funding in AI and machine learning startups rose sharply to $1.3 billion, up from $782 million last year.

Investors said AI will remain a key focus, even amid concerns about a global AI bubble. Areas like voice AI are gaining attention due to India’s voice-first user behavior.

Meanwhile, late-stage funding dropped sharply to $1.8 billion from $2.9 billion in 2024, as many mature startups chose IPOs instead of private funding.

Experts believe that recent IPOs have created a new group of experienced founders, which could boost early-stage startup activity in the coming years.