Funding dips in H1 as VCs raise the bar

THE MESSAGE FROM India's venture capital ecosystem over the last couple of years has been clear: inadequate scale and frothy valuations are no longer acceptable. The bar is getting higher now.

- AYANTI BERA

Even two years ago, a consumer-tech startup with ₹8-10 crore in annual recurring revenues (ARR) could raise a Series A round of ₹30-50 crore. Today, the same company would need to show more than double of that in ARR just to get investors to the table.

It's not just traction in revenues. Investors are now raising questions about product-market fit, profitability and cash-flow visibility. They are also evaluating capital efficiency, customer stickiness before they write out a cheque.

In the first half of 2025, Indian tech startups saw a 25% decline in funding year-on-year at $4.8 billion. In 2024, they had raised $11.3 billion, slightly higher than the $10.7 billion raised in 2023. Prior to that, tech startups bagged $25.4 billion in 2022 and $37.2 billion in 2021.