Indian Venture Capital Fundraising Slows as Investors Seek Sharper Strategies and Clearer Exits

Fundraising by venture capital (VC) firms focused on India has experienced a notable slowdown this year. As of October 14, 2025, these firms have collectively raised $2.8 billion across 31 funds. This figure represents a decrease from the $3.8 billion raised across 44 funds in 2024 and is substantially lower than the $8.6 billion secured in 2022 through 103 funds, according to data from PitchBook.

The primary reason for this trend is the increased scrutiny from Limited Partners (LPs). LPs are now actively seeking VC funds that demonstrate clear differentiation, specialized sector focus, and robust strategies for deploying capital. They are also prioritizing greater visibility on how and when their investments will yield returns through exits. This shift comes after a period of abundant global liquidity that fueled the surge in 2022.

Despite the lower fundraising totals, the underlying interest in India's economic potential remains strong. Investors continue to believe in India's growth narrative and its capacity to foster resilient businesses. Opportunities in areas like AI-native businesses and sectors like healthcare are being closely evaluated, with LPs focusing on scalability, exit visibility, and genuine value creation capabilities. For deeptech funds, the challenge is aligning investment timing with the maturity of India's ecosystem for meaningful exits.

Several prominent India-focused VC firms have managed to close new funds this year, including Accel ($650 million), Bessemer Venture Partners ($350 million), A91 Partners ($665 million), W Health Ventures ($70 million), and Cornerstone VC ($200 million).

**Impact** This slowdown in VC funding can affect the pace of innovation and growth for early-stage companies in India, potentially influencing future public market listings and overall economic dynamism. The increased selectivity from LPs could lead to a more concentrated investment landscape, favoring well-defined strategies and proven execution. Rating: 7/10

**Definitions** * **Limited Partners (LPs):** Investors who provide capital to investment funds, such as venture capital or private equity funds. They are typically institutional investors like pension funds, endowments, and insurance companies. * **Venture Capital (VC) firms:** Investment firms that provide capital to startups and small businesses with perceived long-term growth potential. * **Sectoral Specialisation:** An investment strategy where a fund focuses on specific industries or sectors, such as technology, healthcare, or energy. * **Disciplined Deployment:** A strategy of carefully managing and investing capital, avoiding hasty or ill-considered investments. * **Visibility on Exits:** The clarity and predictability of how investors will realize returns on their investments, usually through an Initial Public Offering (IPO) or acquisition. * **Global Liquidity:** The availability of money or credit in the global financial system, which influences the ease of investment and borrowing. * **Investment Thesis:** A clearly articulated rationale for an investment strategy, outlining the expected returns and the conditions under which they can be achieved. * **Scalability:** The ability of a business or system to handle a growing amount of work or its potential to grow. * **Deeptech:** Refers to startups and companies focused on developing highly innovative, often science-based technologies that typically require significant R&D and have the potential for substantial market impact. * **Ecosystem:** The network of interconnected individuals, organizations, and resources that support a particular industry or sector, such as the startup ecosystem comprising entrepreneurs, investors, and mentors.