According to Inc42’s ‘Indian Startup Funding Report 2024’, the funding raised by Bengaluru-based startups declined 19% YoY to $3.4 Bn
Industry insiders see late-stage funding deals making a strong comeback in Bengaluru in 2025 as more and more big startups flip back to India next year
While enterprise tech continues to dominate Bengaluru’s startup narrative, consumer tech startups and vertical AI has also emerged as a promising area of focus
After hitting a historic low in 2023, the Indian startup ecosystem showed promising signs of recovery in 2024. The total funding raised by Indian startups jumped 20% year-on-year (YoY) to $12 Bn in 2024, reaching levels similar to 2020. However, Bengaluru, the undisputed startup hub of the country, saw a decline in funding and the city lost its top position to Mumbai.
According to Inc42’s ‘Indian Startup Funding Report 2024’, the funding raised by Bengaluru-based startups declined 19% year-on-year (YoY) to $3.4 Bn. This drop brought the city’s funding figures to the levels last seen in 2015. Meanwhile, Mumbai surpassed Bengaluru as the top city for startup funding, thanks to high-profile deals like Zepto’s mega funding round. Startups based in the country’s financial capital raised $3.7 Bn in 2024.
It is important to note that Zepto moved its base to Bengaluru from Mumbai this year. However, to maintain data consistency, its funding rounds have been attributed to Mumbai.
However, despite the decline in funding, Bengaluru was the leader in terms of funding deals in 2024. The city recorded 285 deals in 2024, an increase of 14% from 249 deals in 2023. The challengers, Delhi NCR and Mumbai, saw 252 and 175 deals materialise, respectively, in 2024.
According to startup ecosystem experts, the funding dip in Bengaluru should not be read as a sign of waning investor interest. They pointed out that the high deal count highlights a thriving ecosystem of early stage startups in the city.
Bengaluru Remains Top Early Stage Startup Hub
“Most early stage startups – pre-seed, seed, and Series A – are concentrated in Bengaluru. Meanwhile, growth stage startups are skewed towards Delhi NCR and Mumbai. Late-stage funding activity is more prominent in these two hubs. Moreover, public market interest is centred around Delhi and Mumbai, too. Hence, the funding amount is lesser in Bengaluru,” said WEH Ventures partner Rohit Krishna.
He added that most of the startups which are around Series C stage are currently focussed on achieving profitability and not raising capital.
As per the Inc42 report, Bengaluru witnessed notable growth in seed-stage funding and deal count in 2024. Seed stage startups in the city raised $268 Mn in 2024, an increase of 26% YoY. The deal count also grew 4% YoY to 114 deals.
In contrast, growth-stage funding in Bengaluru experienced a 16% YoY decline to $949 Mn. However, the number of growth-stage deals surged 20% to 64 in 2024.
Late stage funding also presented a mixed picture, with deal count declining 18% to 32 deals. However, the total funding amount soared to $2.1 Bn, an impressive 88% YoY growth.
Anup Jain, former managing partner of Orios Venture Partners and founder of BlueGreen Ventures, said that late-stage funding deals could make a strong comeback in Bengaluru in 2025. He cited the phenomenon of startups flipping back to India, including Razorpay, which has its office in Bengaluru, as one of the reasons for this.
It is pertinent to note that Razorpay is in the process of moving its base to India and the exercise is expected to be completed in the ongoing fiscal year.
On the decline in funding in Bengaluru, Jain said that the increasing focus of startups on IPOs is among the key reasons behind this.
“This year has been relatively mild for the overall private investment market, with a larger focus shifting towards IPOs. For venture capital firms, the primary focus has been on exits rather than fresh investments. The decline in funding can also be attributed to internal investors prioritising secondary deals, and the increasing number of companies heading to IPOs, many of which are based in Delhi NCR,” he said.
Hottest Sectors Of Bengaluru
Enterprise tech has emerged as the top sector in Bengaluru over the last decade, followed by fintech, ecommerce, healthtech, edtech. Enterprise tech startups bagged 753 deals between 2014-2024, followed by fintech and ecommerce startups with 603 and 488 deals, respectively. Similarly, healthtech and edtech startups bagged 368 and 246 deals, respectively, during this period.
This trend continued in 2024 as well, with Bengaluru-based enterprise tech startups securing mega funding deals. While digital infrastructure solutions startup iBUS raised $200 Mn (about INR 1,658 Cr) from National Investment and Infrastructure Fund (NIIF), SoftBank-backed B2B SaaS startup Whatfix secured $125 Mn (around INR 1,045 Cr) in its Series E funding round led by Warburg Pincus. These two deals were also among the top 10 funding deals of 2024.
What’s Next For India’s Silicon Valley?
While enterprise tech continues to dominate Bengaluru’s startup narrative, healthtech experienced a significant boom in 2024, according to WEH Ventures’ Krishna.
For context, Bengaluru-based healthtech startups saw some major funding rounds this year. While Healthify (formerly HealthifyMe) raised an additional $20 Mn to close its Pre-Series D round at $45 Mn, Orange Health secured $12 Mn in a funding round led by Amazon Smbhav Venture Fund. 4baseCare raised $6 Mn in its Series A round led by Yali Capital.
Krishna said that the healthtech sector saw a notable surge in investments, especially at the early stage, over the past six months. Additionally, Zepto’s success has reignited investor interest in consumer tech startups, while vertical AI has also emerged as a promising area of focus.
Meanwhile, Jain believes that D2C startups, along with consumer tech, are seeing considerable interest from investors.
Amid all these, the Karnataka government continues to take proactive steps to boost the startup ecosystem in the state. Earlier this year, it launched a VC fund of INR 20 Cr to invest in animation, visual effects, gaming, and comics (AVGC) startups.
A few months ago, Karnataka’s IT and biotechnology minister Priyank Kharge said that the state is expected to attract $6.2 Bn in investments from the US and Europe across key technology sectors, including biotechnology, AI, semiconductors, AVGC, and healthtech.
Kharge also proposed the creation of a deeptech innovation cluster in Bengaluru, urging collaboration between the Karnataka Digital Economy Mission and NASSCOM to help scale up startups in the deeptech sector.
All in all, the sentiment remains skewed towards Bengaluru. Favoured by local regulatory push, availability of high quality talent pool and proximity to prominent VCs and PEs, the startup hub continues to be a breeding ground for entrepreneurial activity and is well-poised to continue its dominance as the home of biggest names in the Indian startup ecosystem.
[Edited By Vinaykumar Rai]
