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India’s early-stage venture funding market is showing clear signs of revival after a prolonged funding winter. According to data from Venture Intelligence, pre-seed investment activity surged in 2025, with deal volumes rising 52 per cent year-on-year to 67 and total investment value jumping 74 per cent to $68.5 million, compared to $39.3 million in 2024. The rebound reflects renewed investor confidence as founders return to the fundamentals of building sustainable, revenue-focused start-ups. Investors attribute the momentum to a combination of macroeconomic stability, normalised valuations, and the rise of new tech-driven opportunities. “The renewed appetite for early-stage investing in 2025 comes down to a mix of caution and conviction,” said Ankur Shrivastava, Founder and Managing Partner, Momentum Capital. “Domestic indicators like strong GST collections, rising advance tax receipts, and resilient consumption are giving investors confidence that India’s next growth cycle is being built on firmer ground.” Brijesh Damodaran Nair, Managing Partner at Auxano Capital, pointed to a surge in new capital formation as a key driver. “India saw dozens of fresh early-stage and seed-focused funds raised in 2024–25, with more than $8 billion in new start-up funds launched last year alone,” he said. “Entry pricing has normalised, and investors are now getting cleaner ownership at sensible caps.” leading the new cycle If 2021 was the year of exuberance, 2025 is shaping up as one of disciplined optimism. Founders, forced to adapt during the funding slowdown of 2022–23, are returning with sharper business models and better alignment between vision and execution. “The last two to three years forced founders to go deeper into why they’re building what they’re building,” said Shrivastava. “They’re now more thoughtful about revenue visibility, unit economics, and capital efficiency.” Nair agrees that the quality of early-stage deal flow has improved, even if volume hasn’t fully recovered. “The funding drought forced discipline—founders stopped pitching growth-at-all-costs and started showing clear paths to profitability much earlier,” he said. “Today, profitability, not blitsscaling, is the priority.” At the same time, investors said the new wave of innovation is being powered by AI and deep tech, which are transforming both enterprise and consumer-facing sectors. “AI continues to dominate, but what’s interesting is how it’s blending into other sectors rather than standing alone,” Shrivastava noted. “We’re seeing strong founder activity in AI-first SaaS, industrial automation, and climate applications.” Naman Lahoty, Partner at Stellaris Venture Partners, said this convergence is creating investable opportunities at the intersection of technology and consumer behaviour. “Investor interest in early-stage funding never really went away,” he said. “What’s changed now is a surge in deal flow driven by founders applying AI to real-world problems—and the rise of Gen Z consumers driving a ‘Quick Economy’ across categories.” Lahoty added that AI has enabled founders to build more scalable, capital-efficient businesses. “Almost all software companies we’re seeing this year are AI-first,” he said. “In consumer tech, deal flow has shifted from D2C retail brands to digital consumer platforms that offer stronger long-term scalability.” Sustainable cycle ahead While pre-seed round sizes vary—ranging from $300K–$2M depending on founder experience and traction—valuations have largely stabilised after the 2021 excesses. Shrivastava said investors are taking a “patient capital” approach, writing smaller but conviction-led cheques to support founders through early milestones. Nair observed that more than half of seed and pre-Series A deals now fall in the $500K–$2M range. “AI and frontier-tech founders can still command hotter caps,” he said, adding that “but overall, pricing is far more rational.” Most investors believe the current uptick is more than a short-term rebound. “It’s a cautious recovery, but I’d say sustainable,” Shrivastava said. “As long as discipline continues, this cycle could lay the foundation for a more stable early-stage ecosystem,” he added. Lahoty echoed that sentiment, describing India’s early-stage market as structurally resilient. “If you look at any rolling three-to-five-year average, capital has consistently trended upward,” he said. “India’s early-stage ecosystem will keep attracting global capital—driven by innovation, talent density, and long-term conviction.” Published on October 29, 2025
