India’s startup ecosystem thrived in Q1 2025, securing $2.5 billion in funding and maintaining its position as the third-largest globally, after the US and UK. Delhi surpassed Bengaluru in funding, driven by strong IPO exits, despite Bengaluru leading in deal volume. Late-stage funding surged, while early-stage investments declined. Key growth sectors included auto tech, enterprise applications, and quick commerce. Mergers and acquisitions rose 41% year-on-year, with 38 deals recorded. These developments reflect India’s growing influence in the global startup landscape.

“India has today become one of the largest ecosystems in terms of startup activity as well as funding activity,” said Neha Singh, Co-Founder of Tracxn. “Even if you look at the number of unicorn companies or late-stage companies valued at over a billion dollars, India is now the third-largest startup ecosystem.”
India’s startup ecosystem continued to thrive in the first quarter of 2025, recording $2.5 billion in funding and maintaining its position as the third-largest globally, trailing only behind the United States and the United Kingdom. According to Tracxn’s latest Geo Quarterly India Tech Report, a significant shift occurred during this period as Delhi surpassed Bengaluru in total funding secured, marking a pivotal moment in the nation’s entrepreneurial landscape.
Although Bengaluru led in the number of deals closed, Delhi emerged as the funding leader, primarily due to robust IPO exits. Tech companies based in Delhi contributed to 40% of the total funding raised by Indian startups, while Bengaluru accounted for 21.64%.
The report revealed an uptick in late-stage funding, contrasting with a decline in early-stage investments. Singh linked this trend to the strong pipeline of companies preparing for IPOs, following a buoyant IPO market in 2024. “Many venture-backed companies went public last year, providing strong success stories. As a result, we now have a strong pipeline of mature companies looking to enter the IPO market,” Singh explained.
Among the standout sectors in Q1 2025, auto tech witnessed remarkable growth, fueled by the expansion of electric vehicles. Enterprise applications and B2B e-commerce continued to perform well, while artificial intelligence (AI) and quick commerce sustained investor interest.
The report highlighted that AI funding in India remains focused on applications rather than infrastructure. Meanwhile, the quick commerce sector has grown rapidly, with key players like Blinkit, Zepto, and Swiggy Instamart driving the sector’s momentum.
Another noteworthy trend was the surge in mergers and acquisitions (M&A). The first quarter of 2025 recorded 38 M&A deals, reflecting a 41% year-on-year increase. Notable transactions included Hindustan Unilever’s acquisition of Minimalist, underscoring a rising appetite for strategic takeovers.
“This is overall positive for the startup ecosystem. It provides additional liquidity for investors, which could lead to more reinvestment into the VC ecosystem,” Singh added.
The report also emphasized that India’s tech startups raised $2.5 billion between January 1 and March 20, 2025, representing an 8.7% increase year-on-year and a 13.64% rise compared to the previous quarter. With these developments, India solidifies its position as a global startup powerhouse, ranking third in terms of funding activity after the United States and the United Kingdom.
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