Startup Funding Trends: Fintech Leads Amid Broader Slowdown
The outlook for fintechs has improved significantly over the past two years, with 12 IPOs in 2024 and 2025. While public markets revived interest in startup listings during 2025, overall funding levels for startups have not changed much. Experts predict that in 2026, tighter global funds, currency volatility, and trade or tariff shocks will likely keep startups in need of capital, maintaining the “funding winter” for the foreseeable future.
After a rise in 2024, funding dipped in 2025. Startups raised $11.1 billion, according to Tracxn data, nearly the same as in 2020, when $11.5 billion was raised.
“India’s tech startup funding winter is yet to fully ease and is likely to remain prolonged. After the pandemic-driven surge, funding levels have largely returned to pre-pandemic ranges, with no sustained recovery so far. While 2024 saw a modest uptick, total capital deployed was still less than half of the peak in 2021 and 2022,” says Neha Singh, co-founder of Tracxn.
Funding rounds also fell in 2025 compared with the previous year and the pandemic period, showing a slowdown in activity.
Most experts expect startup funding to remain subdued in 2026 due to geopolitical uncertainty and because many startups are pivoting to AI-driven strategies, prompting investors to wait for new business models to emerge.
Post-Pandemic Startup Funding Overview
| Funding Year | Total Funding | No. of Rounds | Change From Previous Year |
|---|---|---|---|
| 2025 | $11.1B | 1,649 | -12.6% |
| 2024 | $12.7B | 2,531 | 13.4% |
| 2023 | $11.2B | 2,658 | -55% |
| 2022 | $25B | 3,590 | -35.7% |
| 2021 | $38.9B | 3,582 | 238% |
| 2020 | $11.5B | 2,517 | NA |
Source: Tracxn
Is the Fintech Funding Winter Over?
Fintechs have seen a brighter exit picture, with 12 IPOs over 2024–25, making the sector more attractive for investors. Some believe the fintech funding winter may be ending.
Akshay Mehrotra, MD & Group CEO of Fibe, notes that investor confidence in fintech has steadily grown. Investors now back companies with proven models, consistent traction, and strong governance.
“Investor sentiment is positive, leading to stronger conviction and sustained capital support. This confidence allows fintechs to scale across product innovation, technology, and long-term growth. The sector has entered a more confident, growth-oriented phase,” Mehrotra adds.
Tracxn data shows fintech funding rose slightly from $2.3 billion in 2024 to $2.4 billion in 2025, making India the third most funded fintech market globally, after the US and UK.
“There used to be regulatory uncertainty in fintech, but that is largely resolved, boosting confidence to build,” says Aditya Vuchi, general partner at VCMint.
Non-public exits are also active, with 22 acquisitions in 2025 and 32 in 2024. Since 2023, fintechs have created six new unicorns, a rare achievement in the current startup ecosystem.
Investors are also showing interest in other sectors, such as spacetech and drones, for both civilian and defense applications. India now has many experienced super angels and founders who prefer investing early in promising startups.
Funding Cycles Are Getting Longer
While early-stage sectors see interest from VCs and limited partners, many startups struggle to secure later-stage funding. Seed and early-stage funding remained stable in 2025, but late-stage deals fell sharply. Progressing from Series A to B is difficult, creating a funding gap.
“The visibility of deeptech startups has improved, but the path to profitability is still evolving. Government support on land and capex helps, but Series B+ visibility remains low compared to Seed and Series A,” explains Manu Iyer, co-founder and general partner at Bluehill.VC.
Other sectors face similar issues. “Investors are now more rigorous, focusing on scalability, profitability, and resilience before committing capital,” Singh adds.
Rising valuations are also slowing investor enthusiasm. “Exits in deep tech, like Ather and Tonbo, are beginning to build confidence for later-stage investors. Large institutions like banks and insurance companies are potential players, despite current restrictions,” says Parthasarathi Sridhar, co-founder of Bluehill.VC.
Stage-Wise Funding Overview
| Year | Seed Stage (USD) | Early Stage (USD) | Late Stage (USD) |
|---|---|---|---|
| 2025 | $1.2B | $4.2B | $5.4B |
| 2024 | $1.5B | $3.7B | $7.0B |
| 2023 | $1.4B | $3.6B | $5.6B |
| 2022 | $2.2B | $6.7B | $15.4B |
| 2021 | $2.0B | $7.5B | $29.2B |
| 2020 | $1.3B | $2.5B | $7.6B |
Source: Tracxn
Where Are Domestic Funds?
Early and seed-stage funding is stronger because domestic sources—alternate investment funds (AIFs), family offices, and angel investors—drive most investments. Foreign funds are slower to invest due to paperwork, taxes, and higher costs.
“Many super angels and founders in India prefer investing early in promising startups,” Vuchi notes.
Foreign investors also face challenges, as non-domiciled institutions must file local taxes and often bear high expenses when investing through feeder structures.
Experts expect domestic investors to play a larger role going forward, supported by government initiatives that encourage local institutions to participate in the startup ecosystem.
“We have large institutions like banks and insurance companies with long investment cycles. If the Canada Pension Fund can invest, why can’t our domestic institutions?” Sridhar adds.
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