Overview
Investment in Indian startups contracted by 8.3% in the most recent full year (2025), making India the sole market among the global “Big Five” to record a year‑on‑year decline, according to Vestd India’s Global Investment Report based on Crunchbase data.
Funding Activity by Quarter
Early‑2026 data show 560 funding rounds in Q1 2026, down from 668 in Q1 2025 and 1,049 in Q1 2024, indicating a continued slowdown. The total number of funding rounds fell to 2,497 in 2025, trailing the United Kingdom’s 3,331 deals.
Early‑Stage Contraction
The decline was driven primarily by early‑stage funding weakness: seed‑stage investment fell 31.8%, angel funding dropped 25.3%, and pre‑seed deals declined 21.9%, signalling a higher bar for founders seeking initial capital.
Late‑Stage and Liquidity Growth
Conversely, late‑stage and liquidity‑focused activity expanded markedly. Secondary‑market transactions rose 77.2%, post‑IPO debt issuance increased 45.7%, and Series C rounds grew 27.6% over the year. Deal activity in the second half of 2025 slipped 11.8% relative to the first half, reflecting heightened investor caution.
Global Comparison
Globally, India remains a top‑five startup hub but faces competition from faster‑growing markets: Canada recorded a 46.4% rise in investment activity and China a 31.9% increase. Despite the slowdown, India ranked third worldwide for emerging unicorns (companies valued between $500 million and $1 billion) with 43 such firms, behind the United States (239) and China (44) but ahead of the United Kingdom (27).
Emerging Unicorn Pipeline
The emerging‑unicorn pipeline contracted 6.5% year‑on‑year, suggesting that early‑stage funding constraints are beginning to affect future scale‑ups.
Sectoral Shift Toward Deep‑Tech
The report highlights a broader shift toward deep‑tech sectors. Artificial‑intelligence‑related emerging unicorn formation rose 41.7%, data and analytics saw a 30.5% increase, and science & engineering grew 28.4%.
Commentary from Vestd
Ifty Nasir OBE, founder and CEO of Vestd, stated that the market is moving away from high‑volume early‑stage speculation toward a fundamentals‑driven environment, emphasizing that investors now demand traction, strong unit economics, and clear profitability pathways. He added that aligning with deep‑tech capital flows—particularly AI, data, and advanced engineering—is essential for India to retain its leading startup‑hub status.
About Vestd India
Vestd India is a share‑tech platform that assists private companies with cap‑table management, employee stock ownership plans (ESOPs), shareholder records, and governance. Following its acquisition of Trica Equity, Vestd combines local Indian ecosystem expertise with technology from a leading UK share‑tech platform.
Contact
Sparsh Johari, Marketing Lead, can be reached at sparsh.johari@vestd.com.