Bengaluru lags, Mumbai rises: How India's top startup hubs fared in H1 2025

Bengaluru, India's Silicon Valley, saw a dip in funding in the first half of 2025, while Mumbai, India's financial capital, is quietly gaining ground, thanks to strong market and sectoral tailwinds.

The latest data by market intelligence platform Tracxn shows Karnataka's startups raised $1.7 billion in H1 2025, almost 100% led by Bengaluru, though funding dropped 44% in the state compared to $3 billion in H1 2024.

Mumbai, on the other hand, saw 8% increase on-year at $1.4 billion, accounting for 64% of funding in Maharashtra. These two biggest startup hubs in India paint contrasting pictures as Bengaluru sees a decline in investment but Mumbai gains ground, led by strong early-stage activity.

In H1 2025, Karnataka, dominated entirely by Bengaluru, saw a yearly decline in five out of six parameters — funding, rounds, Series A+, seed, soonicorns, unicorns and IPOs — with acquisitions driven by Groww's Fisdom deal for $150M and ICRAs' Fintellix deal for $26M growing 24% on-year. Only fintech and retail sectors showed resilience, driven by two $100M+ funding rounds, down from 5 on-year, as Groww and Jumbotail raised $202M (Series F) and $120M (Series D), respectively.

While late-stage and seed-stage funding dropped compared to H1 2024, early-stage rounds showed marginal growth (15%), with Accel, Angel List and LetsVenture emerging as overall lead investors. Accel led the investments with 34 rounds. The state saw fewer mega-rounds and just one IPO, two new unicorns — Jumbotail and Juspay — emerged, up from 1 in H2 2024.

Maharashtra, on the other hand, saw an uptick in four out of six parameters, driven by robust early-stage activity and a steady presence of mega-deals. Among regions, Mumbai topped, receiving 64% of all funding, followed by Thane, 19%, a distant second. Analysts say Mumbai, being a financial capital and a base for some of India's largest banks and regulators, has seen a huge growth in startups across fintech, retail and transportation & logistics tech, making it an easy choice for startups, especially in fintech.

Barring total funding and new unicorns, the Mumbai-dominated state also saw a drop across funding rounds, series A+, seed, soonicorns, acquisitions and IPO. Unicorn creation also remained limited, but transportation and logistics tech and retail experienced sharp growth in investor interest, with $463M, $378M, and $321M funding in H1 2025. Exhibiting a stable and slightly improving investment climate, early-stage funding topped at $698 million, up 76% on year, followed by late-stage at $524 million, a drop of 29% from H1 2024. Seed stage dipped 38% on-year to $129 million. Like Karnataka, Maharashtra also saw two $100M+ rounds, down from 3 in H1 2024. GreenLine and Infra.Market raised $275M and $222M, respectively, with transportation and logistics tech & real estate and construction tech driving the funding. While there was only one unicorn (Mitsui), 2 companies went public — ArisInfra and ATC Group.

India saw the creation of five startups achieving unicorn status in 2025: Netradyne, Drools, Porter, Fireflies AI, and Jumbotail. Though it's an increase from three in 2024 and zero in 2023, the funding drought has led to a consistent decline in startups achieving unicorn status in India. The overall funding into India's startup ecosystem has fallen over 70% since its peak in 2021, as investors are increasingly prioritising profitability, leading to fewer late-stage funding rounds. "There has been a drop in funding. In H1 2025, around $6 billion has been invested. At the peak in 2021, this was $25 billion. The overall funding is down. And there is a similar drop in late-stage funding and the number of unicorns. I would say that this is not just in India, it's also globally," Neha Singh, Co-Founder, Tracxn, told Fortune India during an interview.

Singh explains that India has started to see some recovery from last year, and it has been trending upwards. "But for the last two quarters, it is still going down, maybe because of the global macro. Overall, funding looks sideways with a slight decline in deal volumes, which have dropped by more than 20%."

On investors' changing outlook towards profitability rather than just growth, Singh said there is more focus on profitability. "You can see the difference in investor commentary—they are talking about when companies will become profitable. Investors are also more conscious about valuations, waiting for them to correct or for companies to grow into them. IPOs have become a more viable option, which is another reason why the focus on profitability has increased."