With three months still remaining in 2025, India’s startup ecosystem has already seen more fund launches than in the entire previous year. In the first nine months, investors launched funds worth over $9 Bn, surpassing the $8.7 Bn number of 2024.

The third quarter alone accounted for over $2.5 Bn in new funds, spread across 25 investors, with 17 of these funds specifically targeting early stage startups, according to Inc42’s Indian Tech Startup Funding Report Q3 2025.

Despite the surge in fund launches, startup fundraising remained muted in the same period, with Indian startups raising just over $2.1 Bn across 240 deals between July 1 and September 28, down 38% from $3.4 Bn raised in Q3 2024.

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A closer look at the funding data in 2025 reveals a clear shift in capital allocation. The bulk of funding is moving toward early stage startups, while late stage primary investments have remained relatively subdued, indicating a focus on younger companies with high long-term growth potential.

Supporting this trend, 58% of the 80 investors surveyed by Inc42 for ‘Indian Startup Investor Survey, Q3 2025’ said they feel more optimistic about early stage ventures. Most respondents said they expect early stage startups to outperform other segments in 2026.

Accel India, A91 Partners, Bessemer Venture Partners, and 360 ONE Asset are among the VC firms that launched early stage funds this year.

Speaking at the launch of its INR 500 Cr early-stage fund in May, Abhishek Nag, senior fund manager and strategy head at 360 ONE Asset, said, “With our early stage strategy, we aim to bridge the white space between India’s robust micro-VC ecosystem and the large global funds.”

Rising Investor Confidence In Early Stage Startups

In 2025, nearly 60% of new fund launches were targeted at seed and Series A rounds. This emphasis on early stage deals mirrored in the investor sentiment. As per the survey, angel, pre-seed, and seed stage startups are expected to capture 58% of investments in 2026.

Growth stage ventures are projected to account for 36%, while late stage and pre-IPO rounds are expected to remain marginal at around 3%. Investors cited the high-growth potential of young startups as a key driver, with backing extending beyond capital to mentorship, strategic guidance, and market access.

Recent fund launches highlight this trend. Rohit Bafna-led early stage accelerator 888VC launched its maiden INR 175 Cr ($19 Mn) alternate investment fund (AIF) to back startups in AI, deeptech, and sustainability.

Earlier, early and growth stage focused Atomic Capital closed its first fund at INR 400 Cr crore, while micro VC Zeropearl VC wrapped up its maiden fund at INR 159 Cr in September.

© Inc42