Venture capital is an attractive way for global investors to access the Indian growth story because India has such a large start-up ecosystem, now the third largest in the world. So VC is a compelling way of getting in early to the exciting firms that are building what is set to become the third largest economy in the world by 2030, says Archana Jahagirdar, founder, Rukam Capital.
A major report by a global consultancy has now been published which confirms the annual numbers behind this trend. The report by Bain & Company in collaboration with the Indian Venture Capital Association (IVCA) found that total funding for the Indian VC space surged in 2024, reaching $13.7bn, a 43% increase compared to the previous year.
There was also a 45% increase in deal volumes with 1,270 transactions recorded. This growth confirms India’s position as the second-largest market for venture capital and growth funding in the Asia-Pacific region.
Investment activity experienced notable growth across various deal sizes and stages, while the average deal size remained consistent. Transactions involving small and medium-sized deals (under $50m), which represented nearly 95% of all deals, increased by 1.4 times. Larger deals exceeding $50m nearly doubled in volume, reaching pre-pandemic levels.
Meanwhile, other important new data shows that the Indian venture capital space is not only surviving but thriving despite the very challenging international environment this year.
The new GlobalData report shows that Indian VC funding grew by 40% in early 2025. The numbers are year-on-year analysis of investment value in January and February of this year and demonstrate that the Indian VC space is considerably outperforming its global peers.
GlobalData also found that deal volume rose by 11% in this period in India. By contrast, global deal volume actually contracted 9% during this period. Global funding value for venture capital investment did grow at 17%, but that is rather less than half the rate in India.
India's strength and adaptability have solidified its position as one of the leading five venture capital markets globally, representing approximately 9% of all transactions and more than 4% of the worldwide funding value by early 2025, according to the report.
And the good news is that the Indian government has also sought to further strengthen the startup sector in its budget. In analysis by EY, the budget “continues the Government's commitment to strengthening India's start-up ecosystem by boosting funding, encouraging innovation and bringing in simplification”.
These measures included more money for the existing Startup Fund of Funds along with exploration of a new Deep Tech Fund of Funds to support next generation start-ups. A window for start-ups to claim a tax holiday has been extended to the end of the decade. And measures to simplify tax and bureaucracy will also be brought in.
The passion for start-ups in India explain why the total number of start-ups in India has now hit 100,000, growth of more than 300 times in the last 10 years. Indian investors are reported to have lined up about $20 billion in dry powder capital waiting to be deployed in start-ups.
The consequence of these positive tailwinds for the Indian startup ecosystem is that there is likely to be increased international investment deployed into the Indian startup ecosystem via Indian venture capital funds as global allocators increasingly recognise the highly attractive opportunities available.
By Archana Jahagirdar, founder, Rukam Capital
