India's Tech Startups Clinch $2.5 Billion Funding in Q1 2025, Fare Better Sequentially: Tracxn

India's tech startups raised USD 2.5 billion in the first quarter of 2025, marking a 13.64 per cent increase over the previous quarter and an 8.7 per cent rise from the year-ago period, a feat that secured its spot as the third most-funded country globally after the US and UK, according to a report by market intelligence platform Tracxn.

The report highlighted that auto tech, enterprise applications and retail were the top-performing sectors in Q1 2025.

Other notable takeaways from the report were the increase in funding for late-stage startups both sequentially and year-on-year basis, even as seed-stage startups as early-stage ventures saw total funding drop on both counts.

"In Q1 2025, India's tech startups raised USD 2.5 billion, marking a 13.64 per cent increase from the previous quarter and an 8.7 per cent rise from the same period last year, making it the third most-funded country globally ahead of Malta and Germany and behind the US and UK," according to the report.

The Geo Quarterly India Tech report offered insights into India's technology ecosystem, trends and developments in the first quarter of 2025.

Late-stage ventures raked in total funding of USD 1.8 billion in Q1 2025, an increase of 38.46 per cent compared to Q4 2024, and an increase of 114.54 per cent when seen in the context of Q1 2024.

Seed Stage starups saw total funding of USD 157 million in Q1 2025, a drop of 23.79 per cent compared to Q4 2024, and 55.77 per cent lower as compared to Q1 2024.

Early-stage startups, on the other hand, saw a total funding of USD 528 million in Q1 2025, a drop of 23.7 per cent compared to Q4 2024, and a drop of 52 per cent compared to Q1 2024.

"While the funding environment remains dynamic, India’s startup ecosystem continues to demonstrate adaptability and growth," Neha Singh, Co-Founder of Tracxn said.

Sectors such as Auto Tech, Enterprise Applications, and Retail are attracting investor interest, and the rise in acquisitions signals a maturing market, Singh said.

"Innovation and entrepreneurship remain at the core of this ecosystem, positioning India for long-term success," according to her.

Auto Tech received funding of USD 1.1 billion, which was significantly higher than levels seen in Q4 2024 and Q1 2024.

Enterprise Applications received USD 650.7 million, a growth of 21.94 per cent over the previous sequential quarter and a drop of 8.12 per cent compared to Q1 2024.

Retail clinched USD 481.5 million in funding, a 21.6 per cent increase from the last quarter and a drop of 2.3 per cent over Q1 2024.

Six companies went for IPO in Q1 2025, the report said adding Nukleus, Maxvolt Energy, Volercars, and Harshil Agrotech were among the companies that went public.

There were no unicorns created in Q1 2025 as against two created in Q1 2024.

A total of 38 acquisitions took place this quarter, marking a 15.15 per cent increase from the previous quarter and a 40.74 per cent rise over Q1 2024.

"The largest deal was Magma General’s USD 516 million acquisition by DS Group and Patanjali Ayurved, making it the highest-valued acquisition of Q1 2025, surpassing Minimalist’s USD 350 million acquisition by HUL," the report said.

Delhi-based tech firms accounted for 40 per cent of all funding seen by tech companies across India, followed by Bengaluru (21.64 per cent).

Accel, Blume Ventures and Peak XV Partners were the overall all-time top investors for Q1 2025. Venture Catalysts, Unicorn India Ventures and YourNest were the top seed-stage investors, while Avataar Ventures and Sofina were the top late-stage.