India’s tech startups gear up for a breakthrough 2025 with explosive funding and deep tech dominance

India’s tech startup ecosystem is poised for a resilient 2025, with a strong funding landscape and a surge in corporate M&A activity, as per the latest report from the industry association, NASSCOM. The report, which was unveiled on the sidelines of Startup Mahakumbh on Thursday, also pointed out that Indian tech startups have reported very promising financials, showing a strong focus on business fundamentals.

“Most tech startups have reported an increase in revenues, indicating a strong focus on fundamentals, with many startups also seeing a rise in profitability. These factors weren’t critical for many systems five years ago, but in the last five years, the fundamental shift has been that revenue and profitability have become important parameters for startups,” said Achyuta Ghosh, Senior Director and Head of Insights at NASSCOM, during a keynote presentation.

As per the report, which was brought in collaboration with Zinnov, the tech sector saw a twofold increase in the number of tech startups founded, bringing the total count to an estimated 32,000–35,000. Notably, enterprise tech dominated the landscape, accounting for 40% of new startups, followed by BFSI and retail tech, while gaming saw minimal traction. Meanwhile, 12 startups went public, driving a threefold increase in IPO activity during the same calendar year.

The report revealed that startup funding surged by 23% in 2024, reaching $7.4 billion. Deal activity also climbed 27% year-on-year, signaling renewed investor confidence.

Speaking to Fortune India, Ghosh attributed the growing corporate interest in acquisitions to startups developing and delivering foundational solutions, making them revenue-generating from day one, if not immediately profitable. He noted a decline in the inception of startups from some sectors, including media and entertainment, but highlighted a significant shift toward Tier-2 and Tier-3 cities, which accounted for 44% of new startups in 2024.

Deep tech dominating the tech startup scene

Of the total tech startups founded in 2024, over 4,000 were deep-tech ventures. These DeepTech startups secured $1.6 billion in funding out of the $7.4 billion raised collectively by tech startups. Seed and early-stage DeepTech startups saw a notable boost, attracting over 35% of total tech startup funding—up 9 percentage points from the previous year. Meanwhile, late-stage DeepTech startups accounted for 12% of the segment’s funding.

“India’s tech startup ecosystem has entered a new phase of strategic resilience and scale, with a 2.1X surge in new startups, a record year for tech IPOs, and DeepTech funding soaring 78% to $1.6B—87% of which is AI-led,” said Pari Natarajan, CEO of Zinnov.

In CY2024, seed-stage startups saw the highest growth in funding share, rising by 29% year-on-year, followed by early-stage startups at 25% and late-stage startups at 21%. This shift highlights a growing investor appetite for backing startups at earlier stages, signaling confidence in the country’s evolving innovation landscape.

What lies ahead?

The report reveals that while low talent availability remains a critical challenge for startups, the severity of cash flow crunches and customer demand concerns has eased. NASSCOM says that the immediate priority now is improving capital access for early-stage and DeepTech startups while addressing regulatory uncertainties. In the medium term, the focus must shift to fostering innovation hubs and ensuring a skilled talent pool in emerging technologies, paving the way for sustained growth in India’s tech startup ecosystem.