This 1.4x increase from 2023 has positioned India as the second-largest VC destination in the Asia-Pacific region, even as the broader market remained flat.
Investor confidence returns amid favourable market conditions
The report highlights a resurgence in investor confidence, driven by favourable macroeconomic conditions, regulatory reforms, and an increase in public market exits. Deal volume rose by 45%, with 1,270 deals in 2024, up from 880 in 2023. While smaller deals (under $50 million) comprised 95% of transactions, large-ticket deals ($50 million and above) nearly doubled, signalling renewed interest in high-growth businesses.
“The VC landscape looks promising in 2025, with a resurgence in activity and a healthier, low-risk investment environment,” said Lightspeed India Partners, reflecting overall investor sentiment.
Consumer tech and AI drive growth
Among the fastest-growing sectors, consumer technology emerged as the largest, with funding surging 2.3x to $5.4 billion. Investors flocked to B2C commerce, quick commerce, gaming, edtech, and travel tech, leading to a fourfold increase in $100M+ deals (16 in 2024, up from just four in 2023).
One standout performer was Zepto, a quick commerce player, which secured $1.4 billion in funding, reinforcing investor confidence in the segment.“Quick commerce is accelerating D2C growth through better access and hyper-targeted marketing,” the report noted.
Meanwhile, software and SaaS (software-as-a-service) investments grew 1.2x to $1.7 billion, driven by strong global demand for automation, AI-driven solutions, and enterprise technology. Funding for generative AI saw a 1.5x increase, with capital shifting towards AI applications rather than infrastructure, a trend that diverged from global markets.
“AI isn’t just another technological wave—it’s a paradigm shift reshaping industries worldwide. From AI-native applications to model testing infrastructure, the potential for disruption is immense. The message for Indian start-ups is clear: Adapt, innovate, and lead this AI revolution,” said Accel in the report.
Traditional sectors gain traction
While technology remained dominant, traditional sectors such as banking, financial services, insurance (BFSI), and consumer/retail saw remarkable growth.
BFSI investments surged 3.5x to $1.1 billion, led by non-banking financial companies (NBFCs) focusing on affordable housing finance and MSME lending.
Consumer/retail funding grew 2.2x to $0.9 billion, with premium brands, food and beverage startups, and D2C brands attracting significant capital.
“We remain as bullish as ever on the Indian startup ecosystem. More companies are scaling beyond double-digit billion-dollar valuations, with an increasing frequency of large liquidity events,” said Nexus Venture Partners.
Exit landscape: IPOs dominate
Investor liquidity improved significantly in 2024, with exit values rising to $6.8 billion, according to Bain & Company. Public market exits accounted for 76% of total exits, marking a clear shift towards IPOs as the preferred exit route.
IPO valuations surged sevenfold, driven by higher liquidity, a rebound in tech stock performance, and investor-friendly policy changes.
Several startups, including Meesho and Zepto, chose to re-domicile in India ahead of their IPOs, encouraged by streamlined regulatory procedures and the removal of the National Company Law Tribunal (NCLT) process, which reduced IPO preparation timelines from 12–18 months to just 3–4 months.
Fundraising dips, but capital remains available
Despite the surge in deal-making, fundraising activity declined by 35% to $2.7 billion, the lowest since 2020, as per the report. The drop was attributed to an overhang of dry powder, cautious deployment strategies, and fewer large fundraises ($100M+ raises fell from 10 in 2023 to just four in 2024). However, the presence of unallocated capital suggests potential for a strong investment cycle in 2025.
Family offices and corporate VCs stepped up, increasing deal volumes by 1.8x, while private equity (PE) funds continued expanding their role, accounting for 20%+ of VC/growth deals. “Investor confidence in Tier 2/3 startups continues to strengthen, driven by success stories like ShopKirana and FreshToHome,” the report noted.
Regulatory reforms and 2025 outlook
Key policy changes played a role in shaping the investment climate in 2024:
– Angel tax abolition boosted early-stage investments.
– Reduction in long-term capital gains (LTCG) tax rates improved investor returns.
– Simplification of foreign VC investor (FVCI) registrations enhanced access to Indian markets.
Looking ahead, the VC ecosystem is poised for continued growth in 2025, with investors increasingly focusing on deep tech, energy transition, and semiconductor startups.
“Like any investment cycle, VCs and private markets will see fluctuations, but the medium-to-long-term outlook remains strong,” said Nexus Venture Partners.
With a rapidly expanding digital infrastructure, strong consumer demand, and favourable government policies, India’s startup ecosystem is well-positioned to maintain its upward trajectory.
“India’s consumption tailwinds, regulatory advancements, and a maturing market will ensure sustained VC interest in the coming years,” the report concluded.
