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| Salutations, Olio aficionados! 👋 | Welcome to the 140th edition of Weekly Olio. We're thrilled to introduce a fresh new twist to your Sundays: Publisher Parmesan, our hand-picked, thoughtfully crafted edition designed to spark inspiration and insights for the week ahead. | It's the perfect way to unwind, recharge, and prepare for the week with something truly worth savoring. | If you're new here and you're looking for more long-form, crispy writing, click the link to subscribe under this GIF 👇 | | | | | |
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| With 150+ countries right at your fingertips, growing your team with Deel is easier than ever. | Get the guide | | India's Venture Capital Resurgence: A Year of Growth, Innovation, and Shifting Priorities | This article is based on insights from the recently published Bain & Company India Venture Capital Report 2025, which analyzes the latest trends, investment patterns, and key drivers shaping India's start-up ecosystem. | India's venture capital (VC) landscape saw a strong recovery in 2024, bouncing back to $13.7 billion in funding—a 1.4x increase over 2023. This resurgence came even as global funding remained stagnant, cementing India's position as the second-largest VC market in the Asia-Pacific region. | The key drivers behind this growth included rising deal volumes, a resurgence in public market exits, and a favorable regulatory environment. As investors regained confidence, sectors like consumer tech, SaaS, fintech, and traditional industries such as banking and retail saw substantial capital inflows. But with new trends emerging and economic forces shifting, what does this mean for the future of India's start-up ecosystem? | | According to Bain & Company's India Venture Capital Report 2025, deal activity in India surged by 45% in 2024, with 1,270 deals compared to 880 in 2023. Smaller deals (under $50 million) made up 95% of the transactions and grew 1.4x, while $50 million+ deals nearly doubled, signaling renewed confidence in high-quality assets. However, the average megadeal size ($100 million+) dropped by 20%, reflecting investor caution around aggressive valuations. | Despite this, five new unicorns emerged in 2024—more than double the number from 2023. Major investments in Zepto, Meesho, and Lenskart signaled a return to high-growth bets, while traditional sectors also attracted significant funding. | At the same time, exit activity reached $6.8 billion, with public market exits accounting for 76% of total exit value, up from 55% in 2023. A 7x surge in IPO exit value helped drive this trend, reflecting strong liquidity, recovering tech stock valuations, and pent-up IPO demand. | | Sectoral Shifts: The Rise of Consumer Tech and SaaS | 1. Consumer Tech Leads the Way | Bain's report highlights that consumer tech became India's largest VC sector, attracting $5.4 billion in funding—a 2.3x jump from 2023. The number of $100 million+ deals surged from four to sixteen, underscoring investor confidence in B2C business models with clear paths to profitability. | Within consumer tech, quick commerce emerged as a standout theme, fueled by rapid customer adoption, evolving value propositions, and demonstrated profitability potential. Travel tech, gaming, and edtech also gained traction, with notable investments including: | Zepto ($1.4 billion raised) PhysicsWallah ($210 million raised) Dream11 ($150 million raised)
| 2. Software and SaaS Maintain Momentum | Funding in software and SaaS, including generative AI, grew by 1.2x to $1.7 billion. Investors focused on mature international players and high-quality scalable assets, with the number of $50 million+ deals rising from five to eight. | Generative AI funding surged by 1.5x, attracting both AI-native start-ups and companies integrating AI into their existing businesses. SaaS saw strong demand in development tools, automation, and marketing tech, reflecting the shift toward digital-first marketing and e-commerce enablement.
| 3. Traditional Sectors Gain Investor Interest | Beyond tech-first industries, banking, financial services, and insurance (BFSI) funding surged 3.5x to $1.1 billion, driven by affordable housing finance and green investments. | Similarly, consumer and retail funding doubled to ~$900 million, with major investments in: | Food and beverages (e.g., Bira, Parsons) Fashion and jewelry (e.g., BlueStone)
| This shift reflects rising discretionary spending, growing demand for premium products, and investor appetite for asset-light business models. | | A More Diverse Investment Landscape | A broader mix of investors fueled 2024's VC growth. While leading venture capitalists (VCs) like Accel, Elevation, and Lightspeed increased deal volumes, Bain's report notes that a new wave of participants entered the market: | Private equity (PE) funds remained active, backing high-growth companies such as Rebel Foods (via KKR). Family offices and corporate VC arms increased their deal volume by 1.8x, participating in marquee $100 million+ deals. New thematic funds—focusing on sustainability, defense, gaming, and deep tech—gained prominence.
| At the same time, fundraising slowed down. Total capital raised fell 35% to $2.7 billion, the lowest since 2020, as investors relied on existing dry powder rather than raising new funds. However, maiden funds (first-time funds) increased their share to nearly one-third of total VC funding, reflecting a growing appetite for niche investment themes. | Regulatory Tailwinds: A Friendlier Investment Climate | Several pro-business regulatory reforms helped restore investor confidence in 2024, including: | Elimination of the Angel Tax – Encouraging domestic and foreign investments. Lower Long-Term Capital Gains (LTCG) Tax – Making exits more attractive. Simplified Foreign VC Investor (FVCI) Registration – Reducing red tape for global investors. Removal of the National Company Law Tribunal (NCLT) Process – Speeding up IPO approvals.
| These changes attracted start-ups back to India, with companies like Pine Labs, Razorpay, Meesho, and Zepto re-domiciling to benefit from India's public markets and investor-friendly policies. | What to Expect in 2025: Growth, Innovation, and Emerging Sectors | As India's VC and growth ecosystem matures, investors are preparing to deploy capital at scale. Bain's report suggests that several key trends will shape 2025: | Growth-Stage Investments Will Rise – Investors will double down on high-quality, scaled assets, particularly in B2C commerce, SaaS, and AI. Deep Tech and Semiconductors Will Gain Traction – With India's digital infrastructure expanding, sectors like energy transition, space tech, and advanced manufacturing will attract institutional interest. Profitability Over Growth – Start-ups will focus on sustainable business models, with investors prioritizing cash flow stability and efficiency over pure scale. Government-Backed Funds Will Support Innovation – Initiatives like space-focused funds and incentives for semiconductor R&D will create new investment opportunities. VCs Will Tread Carefully in Tech Investments – While India remains a tech powerhouse, proposed laws like the Digital India Act may lead investors to reassess their exposure to regulated sectors.
| Final Thoughts: A New Era for Indian VC | The Bain & Company India Venture Capital Report 2025 underscores that India's VC resurgence in 2024 marked a turning point—one where the ecosystem balanced aggressive growth with sustainable business models. The return of large deals, increased public market exits, and a broader investor base signal strong fundamentals for the years ahead. | With strong macroeconomic tailwinds, pro-investment regulations, and an expanding digital economy, India is well-positioned for sustained VC growth beyond 2025. However, investors must stay adaptable, keeping an eye on regulatory shifts, global funding trends, and emerging sectors poised to define the next decade of Indian entrepreneurship. | One thing is clear: India is not just rebounding—it's evolving. | | | That's all for this week. If you enjoyed this edition, we'd really appreciate if you shared it with a friend, family member or colleague. | We'll be back in your inbox 2 PM IST next Sunday. Till then, have a productive week! | Peeyush and Mohit | Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual. |
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