India's rapidly growing startup industry went through a prolonged funding winter in 2022 and 2023, but things began to pick up in 2024 and are expected to see a further uptick this year.
"If you look at it, 2023 was the lowest year in terms of funding, at least in the recent past. The good news is the bottom is behind us and it has started to increase," Neha Singh, the chairperson and managing director of market intelligence platform Tracxn Technologies told THE WEEK.
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According to Tracxn's data, funding in tech startups in India increased around 2.11 per cent to $11.1 billion in 2024. In comparison, startup funding had plunged close to 58 per cent in 2023 to $10.8 billion. In 2022, Indian startups had raised $25.7 billion, a 31 per cent decline from the previous year.
As we look ahead into 2025, things should improve further compared with 2024, said Singh.
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"If you look at 2021, most of the unicorn rounds, the large funding rounds, were led by some global investors like a Tiger Global or a Softbank, etc. They have been fairly inactive, even in the last year. Now there is news about them looking at deals. So, when they come back, obviously, that would accelerate the late-stage activity and hence the overall activity as well," she said.
According to Singh, the mood is definitely much ecstatic this year and one reason for that she points has been the buoyant IPO (initial public offering) market. As per data from Prime Database, 91 companies raised close to Rs 1.60 lakh crore going public on the main board last year.
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Singh points that IPOs have given exit to a lot of investors. With many more startups now talking of going public, it opens a predictable exit path for venture funds and private-equity capital and these funds will in turn get invested into other companies.
Six unicorns were created in 2024. These were ride hailing platform Rapido, electric scooter maker Ather Energy, SaaS-based fintech Perfios, Money View, on-demand logistics company Porter and Ola founder Bhavish Aggarwal's AI startup Krutrim. In comparison, there had been only two unicorns in 2023 - Zepto and InCred.
An area seeing strong investor interest in recent years has been quick commerce. Swiggy went public in 2024 and rival Zomato's shares too had a good run on the stock market. Zepto too has plans to go public.
"People expect quick commerce to become really large, a lot of traditional sectors will get reimagined in this wave. It all started with grocery, fresh fruits and vegetables. Now, you have electronics available and even toys available on quick commerce," pointed Singh.
Currently, it's the rapid (10-minute) deliveries that have given quick commerce companies a huge consumer traction. If these companies become price competitive too, then their business could get an even massive boost with more categories getting added, pointed out Singh.
The Gen AI market is also expected to see a lot of traction this year.
"Gen AI will see a lot more growth, a lot more companies are entering this space. So, this is also a medium term or a mega trend that you will see," noted Singh.
Aerospace and defence is another area that will continue to attract capital, she added. The entire value chain in the electric vehicle space, companies, for instance, in the battery technology, EV companies targetting the business-to-business space, are all going to see a lot of interest from investors, according to Singh.
