INDIA Trends and Developments Contributed by: Siddharth Mody, JSA Advocates and Solicitors
JSA Advocates and Solicitors One Lodha Place, 27th Floor Senapati Bapat Marg Lower Parel Mumbai OLP Maharashtra 400013 India Tel: +91 224 341 8908 Email: Sahil.wason@jsalaw.com Web: www.jsalaw.com
Introduction After an unprecedented funding high in 2021, when Indian start-ups raised around USD38 bil - lion, the Indian VC market saw a significant pull - back in 2023. Heightened global inflation, rising interest rates and geopolitical tensions led to risk aversion worldwide. India was no exception as total venture funding in 2023 plummeted to roughly USD9.5 billion. In 2024, market reports indicate that fund - ing bounced back to about USD13–14 billion. This was roughly a 40% increase from the 2023 trough, though still well below the 2021 peak frenzy. Notably, the first half of 2024 saw steady deal flow even amid India’s general elections. Investor surveys at the start of 2025 show opti - mism is returning. January 2025 saw a sequen - tial increase in PE/VC investment activity month- on-month. Importantly, the character of funding activity has shifted. The “growth-at-all-costs” ethos of 2021 has been supplanted by a more measured approach emphasising value and profitability. In 2024, investors gravitated towards start-ups demonstrating solid unit economics or a clear path to break-even, rather than pure top-line growth. Many founders, responding to the lean
funding climate of 2022–23, had already ration - alised their businesses by cutting burn rates, focusing on core products and prioritising sus - tainable growth. As a result, by 2025, a number of Indian start-ups are leaner and closer to profit - ability, which in turn is attracting investors back with renewed confidence. Venture capital firms are conducting more rigor - ous due diligence and taking their time before closing deals. While total deal volumes in 2024 remained below the peak, the average quality of deals improved with a bias towards smaller but substantive rounds. Early-stage investments proved relatively resilient even during the down - turn, seed and Series A rounds in 2023 were only marginally lower than the prior year, and 2024 saw those early-stage bets continue. In contrast, late-stage funding, Series D and beyond, that had been hit hardest in 2023 remained some - what subdued in 2024, except for select big- ticket financings in mature start-ups with strong metrics. Valuations and Investor Caution Valuation trends in 2024 reflected a marketplace still finding equilibrium. After the steep valuation markdowns seen in 2023, when several high- profile unicorns saw their paper valuations cut by
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