India’s startups face funding slowdown

Hello,

This week, JSW Steel finally secured Supreme Court clearance for its long-pending Bhushan acquisition. 

Meanwhile, Infra.Market filed for a ₹5,000 crore ($602 mn) IPO through the confidential route.

And finally, India’s semiconductor policy push seems to be working with JVs from UST–Kaynes and SEALSQ–Kaynes which aim to localise advanced manufacturing.

I hope you enjoy this week’s roundup — please connect on LinkedIn to discuss your next M&A deal.

Let’s dive in.

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Market Trends

Startups: ‘Who moved my lunch?’

Startups are facing a challenging fundraising environment. In India, data shows that startup funding fell by almost a quarter in the first nine months of 2025 (to $7.7 bn, down 23% YoY), with early-stage deals particularly hard-hit. 

Further: Regard the downward trend in Q3.

But despite bad weather, a handful of IPOs offer a silver lining. PhonePe, Urban Company, Groww, Capillary Tech, Infra.Market, Simple Energy and Aequs are all in the public listing pipeline. 

Some founders have even boosted stakes ahead of listings, signalling conviction. Plus, the RBI’s recent bulletin on the surge in UPI transactions bodes well for the country’s fintech, as policy momentum around semiconductors appears to be delivering. 

Exits look steady: the VIP Industries promoter sale (₹343 crore) and Somerset Indus’ 4x exit are notable markers. KKR is zooming in on hospitals with several deals, while JV activity hums along with Bharti-Warburg raising $450 million in debt. Rumoured cross-border transactions such as Indian Oil–Vitol and Reliance/Meta may yet carry hope.

India’s secondary sales markets are also maturing as we discussed in a previous edition of Teaser. 

The country’s startup ecosystem remains an important cog in its capital markets and more IPO- and M&A-driven liquidity may be expected, even as VC inflows slow. For now, sector bets in mobility, commerce, infrastructure and clean-tech look reassuringly meaningful.

Yet notwithstanding India’s $7.7 bn haul in the first nine months of the year, zooming out a bit, one does wonder, where the real global capital actually is.

Mostly, America.

This league table says more than any single datapoint: the gravitational pull of global capital is uneven to say the least, reflecting the real intention of international finance, deal-making and investor conviction with AI as the dominant magnet. 

Indeed, Crunchbase reported that North America claimed about 70% of all global startup funding in H1 2025. Of the total $124 bn invested, nearly $90 bn went to AI startups – mega deals which included Meta’s $14.3 bn into Scale AI, Anduril’s $2.5 bn, Safe Superintelligence’s $2 bn, and Anysphere’s $900 mn financing.

This represented a 43% jump YoY, and the region’s strongest half-year in three years.

By contrast, the UK attracted $7.7 bn, Germany $4.8 bn, and France even less. While India remains ahead of Germany and France, it is a comparative featherweight.

In conclusion, AI is eating the world’s lunch. What can be done to help Indian startups compete on this global scale?