Here is an overview of India’s investment landscape in 2024 and projections for 2025:
1. Recovery in India’s VC Landscape
• VC funding rebounded to $13.7 billion in 2024, a 1.4x increase from 2023 levels, even as Asia-Pacific funding remained flat.
• Deal volume surged from 880 deals in 2023 to 1,270 in 2024, a ~45% increase.
• Small- and medium-ticket deals (below $50M) dominated, making up ~95% of deals and increasing by 1.4x.
• $50M+ deals nearly doubled, reaching pre-pandemic levels, as high-quality assets like Zepto, Meesho, and Lenskart attracted investments.
• 5 unicorns emerged in 2024, compared to just 2 in 2023.
2. Sectoral Trends: Dominance of Consumer Tech, SaaS, and BFSI
• Consumer tech emerged as the largest sector, growing 2.3x to $5.4 billion, driven by B2C commerce, quick commerce, travel tech, gaming, and edtech.
• Software and SaaS funding rose by 1.2x to $1.7 billion, with generative AI investments increasing 1.5x.
• Traditional sectors like BFSI and consumer/retail saw a sharp funding increase, driven by:
• Large addressable markets,
• Socioeconomic tailwinds,
• Consumer demand shifts (e.g., premiumization in brands).
• BFSI deal value grew 3.5x, focusing on affordable housing finance, fintech, and green financing.
3. Quick Commerce – A Breakout Investment Theme
• Quick commerce saw rapid consumer adoption and demonstrated clear paths to profitability.
• Leading companies like Zepto raised $1.4B, and Slurrp Farm reported 6x revenue growth through quick commerce.
• Quick commerce contributed 70%–75% of total e-grocery orders, reshaping consumer brand distribution strategies.
4. VC & PE Investor Trends
• VC/growth funds increased participation, with PE funds playing a larger role in $50M+ deals (50% vs. 45% in 2023).
• Family offices and corporate VCs stepped up investments, increasing deal volumes by 1.8x from 2023.
• Fund-raising declined by 35% to $2.7B, the lowest since 2020, due to accumulated dry powder.
• Maiden funds gained prominence, comprising one-third of total VC capital raised.
5. Exit Landscape – IPOs and M&A Surge
• Exit activity remained stable at $6.8 billion, with IPOs accounting for 76% of total exit value (up from 55% in 2023).
• Public market exits surged 7x, fueled by strong liquidity, regulatory reforms, and a backlog of IPOs.
• Notable IPOs and exits: Swiggy (consumer tech), Mamaearth (retail), and Paytm (fintech).
6. Policy & Regulatory Boost
• Several pro-business regulatory changes helped catalyze the startup ecosystem:
• Angel tax abolished → boosting early-stage funding.
• Reduction in long-term capital gains tax (LTCG).
• Simplified foreign venture capital investor (FVCI) registrations.
• Removal of National Company Law Tribunal (NCLT) process, speeding up startup re-domiciling and IPO timelines.
7. Outlook for 2025 – Investment Themes
• Growth-stage investments to rise as investors focus on profitability and sustainable growth.
• Sectors poised for increased investment:
• Semiconductors & deep tech,
• Energy transition & climate tech,
• Consumer tech & AI-driven applications.
• Hybrid business models (blending online and offline) expected to gain traction.
Key Takeaways
• 2024 was a turning point for India’s startup ecosystem, with investor sentiment recovering, valuations normalizing, and a focus on profitability.
• The IPO market is expected to remain bullish in 2025, with high M&A activity driving liquidity.
• India is solidifying its position as Asia-Pacific’s second-largest VC market, with startups pioneering solutions across AI, SaaS, fintech, and consumer tech .