The Telangana technology ecosystem witnessed a sharp recalibration in investor sentiment in 2025, with total funding declining 64% year-on-year to $236 million from $674 million in 2024, according to the Tracxn Geo Funding Trends Report: Telangana Tech Annual Funding Report – 2025. The steep contraction reflects a sustained pullback from risk-heavy investments, particularly at the late stage, as investors reassessed growth expectations and valuation discipline.

Late-stage funding sees steepest fall

The most significant impact was seen in late-stage funding, which collapsed 96% to $14.8 million during the year, compared with $405 million in 2024. The absence of any $100 million-plus funding rounds in 2025 underscores the retreat from large, growth-oriented bets that had characterised previous years. The data suggests that capital deployment has shifted away from aggressive scale-up funding towards more selective, fundamentals-driven investing.

Early-stage investments show relative resilience

Early-stage activity, however, proved more resilient. Early-stage funding declined 17% to $159 million, while seed-stage investments stood at $62.1 million—lower than the previous year but still higher than 2023 levels. This indicates continued investor willingness to back early, technically validated startups, albeit with smaller cheque sizes and longer time horizons to scale.

Enterprise applications lead sectoral inflows

From a sectoral perspective, Enterprise Applications emerged as the top-funded segment, raising $115 million in 2025. FinTech followed with $65.2 million, while Environment Tech attracted $59.7 million, marking the fastest growth among major segments. However, capital inflows were concentrated in a limited number of deals rather than broad-based sector rotation.

Acquisitions rise as IPO activity stays muted

Exit activity gained momentum during the year, with Telangana-based tech companies completing 12 acquisitions, more than double the five recorded in 2024. IPO activity remained unchanged, with only one company listing during the year, highlighting a preference for strategic acquisitions over public market exits.

Hyderabad retains complete funding dominance

Geographically, Hyderabad continued to dominate the state’s startup ecosystem, accounting for 100% of all funding raised by Telangana-based tech firms in 2025. The sustained concentration of capital reinforces the city’s position as the state’s primary technology hub amid a maturing and more disciplined funding environment.