Growth‑Stage Funding Heats Up: Indian Start‑Ups Raise $5.7Bn, Cut Layoffs and Increased Hiring

Indian start-ups raised approximately $5.7 billion in the first half of 2025, marking a modest increase from $5.3 billion in the same period last year and $5.4 billion in H1 2023, according to Inc42 data.

Although deal volumes remain below the highs of 2021–2022, investors are now favouring growth‑stage funding, backing later‑stage ventures with established revenue models and defined paths to profitability after two challenging years of tighter capital markets.

Layoff Plunge, Hiring Rise

India’s start-up job market has shown significant improvement. Layoffs plunged by 67 percent year‑on‑year, with 2,387 employees affected across 11 start-ups in H1 2025 versus more than 7,100 across 25 start-ups during the same period in 2024, according to a MoneyControl report citing data from Layoffs.fyi.

At the same time, hiring activity rebounded strongly, rising 35–40 percent compared to last year, driven in particular by recruitment in Tier 2 and Tier 3 cities.

“Behind the recovery is a mix of factors: a modest revival in funding, stronger business fundamentals and a shift away from indiscriminate blitzscaling. Q1 2025 alone saw Indian start-ups raise around $2.5 billion, helping restore some confidence in long‑term planning,” MoneyControl quoted NLB Services CEO Sachin Alug as saying.

As per a report by the New Indian Express citing data from jobs platform foundit, non‑metro regions saw their share of start-up hiring climb from 9 percent in April 2024 to 31 percent by April 2025, reflecting companies’ recognition of skilled talent pools outside major urban centres and the cost advantages they offer.

Emerging sectors such as electric vehicles, generative AI, aerospace, drones and deep‑tech have been especially active in driving both capital and human‑resource investment. Start-ups in these domains are increasingly establishing operations in non‑metro hubs like Indore, Jaipur, Coimbatore and Ahmedabad, where specialised engineering and technology talent is available at competitive costs. Global and domestic investors continue to target these next‑generation businesses, betting on their scalability and innovation potential.

Unicorns & H2 2025 Outlook

Despite an overall decline in deal count, five Indian start-ups achieved unicorn status in the first half of 2025: Jumbotail, Drools, Porter, Netradyne and Juspay, as per Inc42 data. Jumbotail, the latest to join the club, raised $120 million in a Series D round led by SC Ventures in early July.

Looking ahead to the second half of 2025, industry observers remain cautiously optimistic. As per the Inc42 report, “Based on current momentum, we maintain our full‑year estimate of US $14 billion–US $15 billion in total start-up funding.”

The first half of 2025 saw an 8 percent year‑on‑year growth in start-up funding, with e‑commerce and fintech leading as the top‑funded sectors. During this period, five start-ups entered the unicorn club, while Bengaluru retained its position as India’s most funded start-up hub.

Moving forward, investor focus for H2 2025 is reportedly shifting toward AI and hardware start-ups, a clear signal of rising confidence in R&D‑heavy sectors and deep‑tech ventures. While funding totals are unlikely to match the peaks of 2021, a steady growth of late‑stage deals and select early‑stage investments in promising generative AI, electric vehicle and deep‑tech ventures is expected.

Meanwhile, mature start-ups such as Pine Labs, Infra.Market, PhonePe and Lenskart are preparing for potential public listings, underscoring the ecosystem’s growing maturity. The hiring surge in Tier 2 and Tier 3 cities is expected to continue as more companies establish delivery, technology and innovation hubs outside metropolitan areas, drawn by talent availability and lower operating costs.