The author, who is a keen advocate of venture capital and startups in India, explains events in the country.

Here is another commentary from Archana Jahagirdar (pictured), the founder of India-based Rukam Capital. She writes about what is happening in the Indian economy and considers the investment implications. The following article focuses specifically on Indian venture capital.

We value this expert insight into a large and growing economy. These articles are designed to get conversations going – so please respond with any views if you wish. The usual editorial caveats apply. Email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

I have previously written that venture capital is a very interesting way for global investors to access the Indian growth story because India has such a large startup ecosystem, now the third largest in the world. VC is a great way of getting in early to the exciting firms that are building what is set to become the third largest economy in the world by 2030.

A major new report by a global consultancy has now been published which confirms the numbers behind this trend. The report by Bain & Company in collaboration with the Indian Venture Capital Association (IVCA) found that total funding for the Indian VC space surged in 2024, reaching $13.7 billion, a 43 per cent increase compared with the previous year.

There was also a 45 per cent increase in deal volumes with 1,270 transactions recorded. This growth confirms India’s position as the second-largest market for venture capital and growth funding in the Asia-Pacific region.

Investment activity experienced notable growth across various deal sizes and stages, while the average deal size remained consistent. Transactions involving small and medium-sized deals (under $50 million), which represented nearly 95 per cent of all deals, increased by 1.4 times. Meanwhile, larger deals exceeding $50 million nearly doubled in volume, reaching pre-pandemic levels.

Megadeals, ie those valued at over $100 million, saw a significant resurgence, with a 1.6-fold rise in activity. Investors concentrated on supporting high-quality companies that had successfully weathered the two-year funding downturn, further energising the startup ecosystem.

The consumer technology sector led the way, securing $5.4 billion in funding – more than double the amount raised in 2023. This sharp increase, driven by a fourfold growth in $100 million+ deals, was largely fuelled by substantial investments in quick commerce, edtech, and B2C commerce. Notable beneficiaries included Zepto ($1.4 billion), Meesho ($275 million), and Lenskart ($200 million).

The increase in funding activity is credited to supportive policy reforms designed to bolster India’s startup ecosystem. Significant steps, such as abolishing the angel tax, reductions in long-term capital gains (LTCG) tax rates, removing the National Company Law Tribunal (NCLT) process, and streamlining Foreign Venture Capital Investor (FVCI) registrations, have played a key role in boosting investor confidence.

“India’s evolving investment landscape reflects a strategic shift towards sustainable, long-term growth – focused on profitability, innovation, and regulatory alignment,” said Sriwatsan Krishnan, partner at Bain & Company. “Policy reforms have boosted momentum, and investors are increasingly backing companies that exhibit strong unit economics and resilience amid global macroeconomic trends.”

The report highlights that the top 10 most-funded startups made up 25 per cent of total venture capital inflows in 2024, with nine of these being consumer-oriented. This emphasises the sustained prominence of the consumer sector within India’s startup ecosystem.

India’s exit landscape experienced remarkable progress, with total exit values climbing to $6.8 billion in 2024. Public markets were a major contributor, accounting for three-quarters of the overall exit value. The number of initial public offerings saw an almost sevenfold increase, as multiple venture-backed companies successfully debuted on stock exchanges, further cementing India’s status as a maturing startup hub.