VC funding into Indian startups sees 25% YoY decline in February

Venture capital (VC) funding into Indian startups for February 2025 declined by 25% on a year-on-year (YoY) basis, primarily due to the noticeable absence of large-value deals.

The total VC funding in February 2025 totalled $669 million, cutting across 100 deals, compared with $890 million raised a year ago. Also, it was a 6% decline compared to the previous month of January 2025, when the total amount was $712 million, according to data from YourStory Research.

This fall in VC funding has been primarily due to the near absence of any large-value deals. In February, there was not even a single VC deal valued at $100 million or above. In addition, there were just six deals with a value above $50 million.

The six startups which raised more than $50 million: Cashfree, Zeta, ToneTag, SpotDraft, Udaan, and Geniemode. In fact, the month saw the emergence of the first unicorn—startups valued at $1 billion and above—in Zeta, which is now valued at $2 billion with its latest funding round.

This slowdown in VC inflow has also got to do with the macroeconomic challenges. The Indian stock markets are bearish and this has a direct bearing on the VC inflow into the ecosystem. Secondly, global trade tension emanating from the decision of the United States to impose tariffs has created uncertainty among investors. Lastly, the domestic economy has not seen any major uptick.

It is clear that only those startups that are category leaders will receive the large value cheques. The majority of the funding activity during the month has been from the early and growth stages of funding. These categories witness large volume in terms of deals but the value remains small.

In February, the early and growth categories of VC funding were almost similar while the late stage came in at third place. Surprisingly, the value of debt transactions was just $19 million.

The fintech segment raised the highest funding during the month at $143 million. However, the remaining segments were all below the $100 million level. This shows the challenges associated with raising capital.

The fintech segment has consistently maintained the position of being the sector that raises the largest quantum of funding.

In terms of cities that raise funding, Bengaluru topped the list followed by Delhi-NCR and Mumbai. Unfortunately for the Indian startup ecosystem, these three cities have dominated the fund inflow for quite some time now and there is lower-value activity in other metros like Chennai, Hyderabad, or Pune.

The only hope is that the forthcoming months will turn out to be positive for the Indian startup ecosystem. As in the past, the first two months of the year have traditionally been slower in terms of VC funding and then there is a pickup. The hope is this trend will be maintained even in 2025.