A hum of optimism is audible in India’s financial corridors. As the country edges closer to the $4-trillion GDP mark, the revival of the Indian story is marked by investor confidence. In the past few years, India’s capital markets have been charting an exceptional course.
But the star of the show has been the Indian start-up ecosystem, which has outpaced heavyweights like China and Germany in terms of funding. In 2024 alone, the tech start-up ecosystem birthed six new Unicorns, saw 13 initial public offerings (IPOs), and celebrated 113 acquisitions with $11.3 billion raised, which was a 6% increase from 2023. And the momentum doesn’t appear to be slowing down.
Industry insiders are predicting that there could be up to 30 more tech start-up IPOs in 2025.
“The public markets are performing exceptionally well,” Pranav Pai, Founding Partner and Chief Investment Officer at 3One4 Capital, an early-stage venture capital firm based in Bengaluru, tells Business Today. “Over this period, we’ve seen 34 VC-backed companies go public. These companies have generally been well-received, provided they are fundamentally strong and sensibly valued.”
Pai believes the Indian IPO Market remains “very warm and positive,” waiting for the right kind of companies. “I think a lot more start-ups will go public in 2025,” he adds, forecasting an IPO rush in the coming year. The most-awaited IPOs of 2025 include Zepto, PhysicsWallah, boAt, and Ather Energy, among others.
In 2025, start-ups are expected to attract increased investment, accompanied by a surge in mergers and acquisitions.
The days of Unicorn hunting seem to be behind us. Since the record-breaking year of 2021-which saw Indian start-ups raise over $40 billion from more than 1,000 deals, creating 42 Unicorns-the pace has cooled considerably. In 2024, only six new Unicorns emerged.
Mrigank Gutgutia, Partner at RedSeer Strategy Consultants, notes the shift in focus. “The quantum of Unicorns may remain smaller because Unicorn status is largely a function of private market interest,” he explains. “If private market interest is high, valuations can skyrocket even if business fundamentals are weak. But in today’s environment, while business fundamentals are strong, private market interest hasn’t fully recovered. Investors are prioritising specific kinds of assets, which is actually a positive shift.”
The question now is not how many Unicorns are emerging but how many start-ups are scaling to become $100 million revenue companies. “That’s a more critical indicator of value creation,” says Dipanjan Basu, Co-founder and Partner at Fireside Ventures, a venture capital firm. “Just within our portfolio, there are three times as many such companies as last year. Whether they achieve Unicorn valuation is a [only] matter of time.”
A recovery in foreign private market investments could also bolster India’s tech ecosystem. With inflation stabilising and interest rates declining, equity investments are expected to pick up pace.
“US tech markets are reaching all-time highs, with major players like Apple, Tesla, Nvidia, and Google performing strongly,” Pai points out. “Global investors, including SoftBank, are likely to return to the Indian market.”
However, experts caution against expecting a return to the 2021-level of funding. “That period marked the end of a bull market cycle,” says Pai. He adds that while 2025 will be a year of recovery, it’s important to note that the public markets are already at all-time highs, matching the 2021 levels in many respects.
As tech IPOs dominate headlines, other sectors are also poised for growth.
AI will remain a buzzword, but emerging segments like export-led manufacturing, consumer tech, BFSI (evolving beyond payments and lending into wealth tech), and climate tech are likely to take centre stage in the year ahead. Edtech, which has been in the news for the wrong reasons in recent years, is likely to gain momentum, and segments like agri tech and health tech are still in their nascent stages.
But, clearly there are reasons for optimism in the start-up ecosystem. As India’s markets surge ahead, 2025 could be the year when start-up funding booms again.
@PalakAgarwal64