2024 Wrap-Up: Record Funding Propel Indian Start-ups; Deeptech & Sustainability Key for 2025

The year 2024 portrayed a transformative picture for the investments in the Indian start-up ecosystem, marked by record breaking IPO activity and a significant surge in venture capital investments. The country’s start-ups attracted a total of $16.11 billion funds from VCs from January to November 2024, while 12 new-age businesses went public to raise billions, according to Bloomberg data. Swiggy’s $1.35 billion IPO became the main highlight of the year, and Zepto alone has raised over $1 billion from VCs and family offices.

The IPO market also looked lucrative to venture capitalists throughout the year. They reaped the rewards of their long term investments, earning more than $4 billion through IPOs and public market sales ---  double returns from 2023, and 2.5 times that of 2022. IPOs have also been the most favoured exit route for the start-up investors. To name a few here, Zomato, which began as a startup and has now risen to rank among the top 30 listed companies on Dalal Street, saw its investors offload shares worth Rs 375 crore during its IPO in 2021.

On the other hand, Swiggy --- which raised $1.3 billion through its recently-launched IPO ---- offloaded shares in the pre-IPO round estimated to be in multi-hundrend million dollar deals and saw $808 million in an offer for sale (OFS) during the IPO cycle. In total, Indian start-ups witnessed over $5 billion in exits through secondary transactions, IPOs, and block deals this year.

Similarly, Peak XV Partners exited from Gurugram-based travel venture Ixigo ahead of its IPO. Another investor Elevation Capital also exited Ixigo through IPO and a pre-IPO secondary sale for liquidity. In a secondary transaction, existing investors of a start-up sell their shares to new investors but the money doesn't go to company coffers.

Resilient economic growth, favourable market conditions, and increased funding in the technology sector drove the investment growth. Of total $16.11 billion funding, tech start-ups have raised around $6.5 billion funds during the January-November period --- 52.5 per cent up as compared to the corresponding year-ago period.

Additionally, a surge in artificial intelligence (AI) interest and deeptech start-ups also led to the growth of investments in new-age businesses. The tech ecosystem saw six new Unicorns which is more than two new Unicorns in 2023. Kalaari Capital has even stated that deeptech is important for India’s economic trajectory. G20 Sherpa Amitabh kant echoed similar sentiments earlier, saying deeptech can grow India’s GDP nine times in the coming year.

High investments, exits through IPOs, and focus on technology resulted in reverse flipping, which means Indian-found but overseas-based start-ups returned back to India to take advantage of both domestic and global capital markets. Companies like Groww and PhonePe have moved their headquarters to India, while Razorpay which plans to go public in 2026 has begun the process of relocating its main office from the United States to India.

Read More | VC Asks Deeptech Start-ups to Explore Asset Financing, Venture Debt Options

2025 Looks More Promising

Looking ahead, 2025 is going to make even bigger promises, with at least 25 start-ups like Meesho, Bluestone, Zepto, Groww, Pine Labs, Zetwork, and others are gearing up to go public. Venture capital investments and domestic capital inflows are also expected to gain momentum, with a particular focus on early-stage startups.

In 2024, funding for late-stage startups outpaced early-stage ventures, with late-stage funding reaching $7.13 billion, compared to $3.16 billion for early-stage startups, according to Tracxn data. However, 2025 is expected to bring a shift.

“We anticipate increased activity in the early-stage ecosystem, driven by Indian homegrown funds tapping into newly unlocked domestic family office capital," said Sharad Bansal, Managing Partner at Warmup Ventures. Investors also predict significant growth in tech-driven business models addressing underserved markets and sectors such as sustainability, consumer tech, and financial inclusion.

Navin Honagudi, Managing Partner at Elev8 Venture Partners said, "2025 will see a further rise in start-up IPOs, along with increased activity in private and secondary markets, which is expected to provide investors with more timely exit opportunities". He emphasises on the capital with long-term value creation, rather than chasing short-term growth metrics.

Read More | Start-ups Could Add $100 Billion to India's GDP by 2030: Kalaari Capital

Alternative financing options, such as venture debt, asset financing, and project financing, are also gaining traction, particularly for deeptech startups navigating initial challenges like manufacturing. Private credit and venture debt are expected to solidify their positions as viable investment avenues, with strong growth potential in India, noted Rajmohan Krishnan, Principal Founder and MD at Entrust Family Office.

Family offices, whose interest in startup investments continues to rise, are poised to play a critical role in 2025. “For the younger generation, having a dedicated team under a family office ensures seamless wealth management, fostering long-term growth and the ability to align investments with personal and family values. They will navigate evolving funding trends by providing strategic guidance and access to better opportunities,” said Krishnan.

Despite a pool of opportunities, start-ups can also face challenges due to the US policy regime (particularly regarding tariffs) after Donald Trump’s return to the throne, geopolitical tensions, domestic economic growth, earnings performance, inflationary pressures, and evolving consumer trends in 2025, he added.

Hence, the year ahead is set to be pivotal for start-ups leveraging innovation and sustainability while capitalsing on emerging funding avenues, ensuring a dynamic and resilient ecosystem for the future.