Chennai: After the euphoria during the pandemic times, investments by venture capital and angel funds are back to their 2019 levels as the funds turn cautious.
During the pandemic, when central banks adopted a loose monetary policy, infusing increased liquidity into markets, VC funding too witnessed an exuberance. After a period of exceptional fundraising in 2021, when Indian startups attracted a record $38 billion, the ecosystem experienced a significant correction. Funding declined by over one-third in 2022 to $25.2 billion, followed by a further drop to $11.3 billion in 2023, representing a cumulative decline of nearly 70 per cent from the peak.
In 2024, Indian startups raised $14.44 billion across 1,337 deals, with stronger performance in the second half of the year. This brought the VC funding close to $13.4 billion, attracted in 2019.
While investor sentiment showed signs of recovery, most VCs remained cautious, expecting better portfolio performance and capital access in 2025. However, macroeconomic uncertainties and a slowdown in angel investing may pose challenges for early-stage funding, finds Datum Intelligence.
VCs are facing systemic challenges. Suppressed exit markets, slower fund pacing, and weak portfolio realizability are dampening momentum. Limited Partners are demanding stronger governance and clearer return visibility, prompting funds to focus on unit economics, capital preservation, and targeted portfolio construction.
Angel investments, too, saw a sharp slowdown from 2,201 deals in 2022 to just 506 in 2024, closer to 341 deals in 2019. Fragmentation, governance concerns, and lack of sustained support have pushed angels to the sidelines. In 2025, the trend continues, with investors favouring proven founders, revenue visibility, and sustainable growth over risky early-stage moonshots. Falling deal volumes, smaller cheques, and lower first-time founder activity point to a retrenchment in the angel layer.
According to Datum, India’s VC landscape in 2025 is not slowing; it’s maturing. From thematic clarity and early-stage recalibration to an emphasis on operational excellence, the ecosystem is resetting toward fundamentals. As macro volatility persists, winners will be those who adapt to disciplined growth, embrace capital efficiency, and align with long-horizon sector bets.
This is not a funding winter, it’s the beginning of a more durable, conviction-led cycle, it said.
