India — VC navigator
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-37%
Year-on-year decrease of venture capital funding in 2023
10%
Of total worldwide venture capital is deployed in India
$32.5bn
Raised by startups in India in 2023
40%
Of total funding falls on E-Com and FinTech
Introduction
This report is a go-to guide for international startups and investors that are keen on exploring Indian market, as it answers several questions frequently asked by entrepreneurs. Additionally, the report includes the list of VC funds and business angels ready to invest into startups in different spheres.
India has rapidly transformed into one of the world’s most exciting venture capital hubs, driven by a thriving startup ecosystem, favorable government initiatives, and a young, tech-savvy population. As of 2024, India ranks as the third-largest startup ecosystem globally, home to over 100 unicorns, and is expected to continue growing at an impressive pace.
In 2023, Indian startups attracted over $32 billion in venture funding, with a notable focus on sectors such as FinTech, EdTech, and SaaS. Although lower than the record-high funding in 2021 ($66 billion), this reflects a global trend of recalibration in the VC space rather than a downturn in India’s growth potential. Moreover, India is showing a recovery in 2024, with over $27 billion invested in Q1-Q3, and the year's statistics have yet to be finalized.
Key sectors such as consumer tech, fintech, and SaaS retained around 60% of the total funding. However, investor interest grew in traditional sectors, notably banking, financial services, insurance (BFSI), and healthcare, along with green-shoot themes like generative AI and electric mobility, as new investment trends emerged. Smaller deals under $50 million showed relative resilience, while mega-rounds (over $100 million) saw a nearly 70% drop.
Amid tightened fund-raising, domestic VC funds emerged more prominently, accounting for over 90% of 2023 fund-raising efforts. In the exits landscape, there was a 1.7x increase in exit values, led by public market trades, secondary sales, and strategic acquisitions, with crossover funds like SoftBank and Tiger Global dominating.
The outlook for 2025 and beyond indicates cautious optimism. Investors are anticipated to focus on traditional and emerging sectors supported by India’s structural economic strengths, including its consumption growth potential, fiscal discipline, and expanding digital infrastructure. Key themes like sustainable agritech, energy transition, and India-focused AI solutions are poised for growth, as India remains a top destination for VC in the Asia-Pacific region.
Market overview
$573 bn
Total funding
>9000
Total VC exits
>110
Unicorns (see below)
Top-5 trends for startups in the region:
1. Shift to Traditional and Resilient Sectors.
While consumer tech, fintech, and SaaS continued to dominate, contributing to nearly 60% of total VC funding, there was a noticeable shift in investor focus toward traditional sectors like BFSI (banking, financial services, and insurance) and healthcare. These sectors provided greater stability due to their robust fundamentals and consistent demand. Concurrently, emergent themes such as electric mobility and generative AI attracted heightened interest, with generative AI funding growing from $15 million in 2022 to $250 million in 2023. This shift reflects a recalibration in investor strategy, moving from a tech-first focus to more balanced, diversified portfolios.
2. Increased Focus on Early-Stage Investments and “India Story”.
Investor confidence in India’s long-term growth story led to a stronger focus on early-stage deals, which rose to 70% of total deal volume, up from 60% in 2022. Small- to medium-sized deals showed greater resilience, signaling optimism for India’s future potential. The availability of talent and infrastructure, particularly outside major hubs like Bengaluru, Delhi, and Mumbai, allowed emerging startup ecosystems in cities such as Pune and Jaipur to attract funding, supporting a broader geographic distribution of venture capital.
3. Rise of Domestic VC Funds and Thematic Fund-Raising.
With international funds more cautious, domestic VCs played a critical role in sustaining the ecosystem, contributing to over 90% of fund-raising efforts in 2023. Several domestic funds focused on specific themes, including sustainability, agritech, and gaming, reflecting a tailored approach to India’s unique market needs. Examples include Omnivore’s $150 million agritech and climate fund and Lumikai’s $25 million gaming fund. This emphasis on thematic funds underscores a growing sophistication in India’s VC landscape, as investors target strategic sectors aligned with national priorities.
4. Strategic Exits and Non-IPO Public Market Sales.
In a high-interest-rate environment, exits surged to $6.6 billion, led by secondary and strategic sales. Strategic exits were prominent in consumer tech, with major deals like Flipkart’s acquisition by Walmart and Lenskart’s sale to ADIA. Non-IPO public trades were the dominant exit route, as crossover funds like SoftBank and Tiger Global trimmed their portfolios, providing liquidity. This rise in exits, particularly through public trades, reflects both an investor drive for liquidity and confidence in India’s maturing capital markets, setting the stage for an anticipated wave of IPOs in 2024.
5. Governance and Profitability as Core Investment Criteria.
In response to recent governance lapses, investors increased scrutiny over corporate governance and profitability metrics. Startups responded by focusing on unit economics, extending financial runways, and prioritizing operational efficiency. Many companies deferred large fund-raising rounds, favoring internal measures to maintain viability in a challenging funding environment. This shift marks a “new normal” in India’s venture landscape, where profitability and governance are as crucial as growth, fostering a more sustainable investment environment.
Launching a startup in India can be incredibly rewarding due to the large market, robust digital infrastructure, and growing support for innovation. The country’s unique socio-economic landscape provides opportunities for startups that can adapt and localize their offerings. However, navigating India’s complex regulatory environment, intense competition, and infrastructural challenges requires strategic foresight and agility. Startups that build a deep understanding of local markets and consumer needs, leverage government and corporate partnerships, and remain flexible to policy and market changes will find a wealth of opportunities to grow and scale in one of the world’s most dynamic startup ecosystems.
Editor's opinion on market characteristics
Pros & Cons of launching a startup in India
Over 1000 venture funds and angels are gathered in the list – start to explore and send your pitch!
Some of the 117 Unicorns in the Indian Market
PropTech
LiveSpace
An online platform offering in-house interior designs for home improvements
Company's website
Incorporation
10 steps to incorporate
your business in India
Incorporating a startup in India involves several steps that may vary depending on the chosen jurisdiction and company type. Here is a general overview of the steps involved:
1. Choose a Business Structure
Determine the most suitable legal structure for your startup — Private Limited Company, Limited Liability Partnership (LLP), or Partnership Firm. Each structure has distinct legal, tax, and operational implications.
2. Obtain Digital Signature Certificates (DSC)
Acquire DSCs for all proposed directors or partners. These digital signatures are necessary for electronic filings with the Ministry of Corporate Affairs (MCA).
3. Apply for Director Identification Numbers (DIN)
Secure DINs for each director by submitting the required forms and identity proofs to the MCA. The DIN uniquely identifies directors and is mandatory for company incorporation.
4. Reserve a Unique Company Name
Utilize the MCA’s Reserve Unique Name (RUN) service to check the availability of your desired company name. Ensure the name adheres to the naming guidelines and does not conflict with existing entities.
5. Draft Incorporation Documents
Prepare the Memorandum of Association (MoA) and Articles of Association (AoA). The MoA outlines the company’s objectives and scope, while the AoA details the internal governance and operational rules.
6. File Incorporation Forms
Submit the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form along with the MoA, AoA, and other required documents to the MCA. This integrated form streamlines the incorporation process.
7. Obtain Certificate of Incorporation
Upon approval, the MCA issues a Certificate of Incorporation, officially recognizing your startup as a legal entity. This certificate includes the Corporate Identity Number (CIN) and confirms the company’s formation.
8. Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN)
Register for PAN and TAN through the National Securities Depository Limited (NSDL) to facilitate tax-related transactions and compliance.
9. Open a Business Bank Account:
With the Certificate of Incorporation and PAN, open a corporate bank account to manage your company’s financial transactions. A dedicated business account ensures proper financial management and compliance.
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