INDIA Trends and Developments Contributed by: Siddharth Mody, JSA Advocates and Solicitors
30–50% or more by investors, 2024 valuations stabilised at more rational levels. Late-stage companies that had raised funds at inflated 2021 valuations often had to reset expectations. In 2024, investors were generally no longer willing to pay a premium solely for rapid growth but rather focused on profitability or market leader - ship. The result was that many funding rounds in 2024 were flat or only modest uplifts from prior rounds, unless the company had substantially improved its metrics. In 2025, with interest rate pressures expected to ease, there is a sense that investor risk appetite will gradually improve. The consensus among VCs is that the Indian market’s long-term fun - damentals, a vast digital consumer base, strong tech talent, and untapped problems waiting for tech solutions, remain intact. Thus, while senti - ment is not back to exuberance, it is decidedly more optimistic in 2025 than in the previous two years. Sectoral Trends In 2023, certain sectors demonstrated resilience and even outperformed others, and these trends carried into 2024. The past year saw a flight to quality, with investors concentrating capital in sectors viewed as having strong unit econom - ics or long-term growth potential, while pull - ing back from overheated areas. In 2025, the sectoral composition of venture activity in India has shifted, with some newer themes emerging alongside the established favourites. Sectoral trends: from fintech to frontier tech The flight to quality has defined the sectoral distribution of capital, with relatively durable or high-potential verticals attracting the most attention.
• Fintech – Fintech continues to be a corner - stone of India’s start-up ecosystem, attract - ing a significant share of VC dollars. In 2024, funding in fintech companies remained robust with approximately USD2 billion going into the sector. Notably, a few large deals skewed this figure. For instance, the DMI Finance raised USD334 million. Even excluding such deals, investor interest in fintech stayed high. This is despite regulatory tightening by the Reserve Bank of India (RBI) in certain areas, such as stricter Digital Lending Guidelines issued in 2022 and limits on prepaid instru - ment loading which posed challenges to some fintech business models. By 2024, many fintech start-ups adapted to the new rules, and regulators also showed a collabo - rative stance. For example, the RBI permit - ted fintech lenders to offer first-loss default guarantees in partnership with banks, under certain conditions. This eased a key con - cern for digital loan platforms. Going into 2025, emerging trends like AI-driven financial advisory and embedded finance are expected to drive the next leg of fintech growth. Indus - try projections estimate that India’s fintech market could reach around USD150 billion by 2025, making this sector a VC magnet. • Consumer tech and e-commerce – The consumer technology sector emerged as a standout performer, with funding escalating 2.3 times to USD5.4 billion. This growth was primarily driven by rapid consumer adop - tion and clear profitability paths in segments like quick commerce within B2C commerce. Notable investments included Zepto, which secured USD1.4 billion, reflecting the sector’s robust appeal to investors. • Software and SaaS – The software and Soft - ware-as-a-Service (SaaS) sector, including generative artificial intelligence (AI) start-ups, also saw substantial growth, with funding
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