Indian start-ups bounced back in 2024: Key trends that defined the ecosystem

After three tumultuous years post-pandemic, the Indian start-up ecosystem scripted a resilient comeback in 2024. The narrative shifted from cash burn to profitability — a mantra echoed across boardrooms — and funding showed signs of stabilising after a prolonged drought.

So, what drove this resurgence? Here are five key trends that shaped the start-up playbook in 2024.

Deep tech integration: In 2024, artificial intelligence (AI) and generative AI (GenAI) took centre stage, with both start-ups and big tech companies integrating these transformative technologies into their offerings. AI emerged as a key growth driver across industries such as manufacturing, healthcare, and retail, shifting the focus from scaling to creating sustainable value.

The funding landscape also reflected this shift. After two years of stagnation, Software-as-a-Service (SaaS) start-ups saw a resurgence in investment activity. VCs increasingly turned their attention to B2B SaaS ventures, particularly those leveraging AI-driven solutions. This marked a departure from the previous trend of broad-based funding, indicating a more strategic and selective approach by investors.

Funding rebound

The Indian tech start-up ecosystem has solidified its position as the fourth largest globally, trailing behind the US, UK, and China. According to Tracxn, India is home to 1,36,000 start-ups and 99 active unicorns, reflecting the dynamism and growth potential of the sector.

Start-up funding in 2024, as of September, reached $7.6 billion, representing a 7% decline compared to $8.2 billion in 2023. However, with one quarter still remaining, the numbers could see a significant boost. The so-called "funding winter" that characterized the investment landscape in recent years has notably eased. Venture capital activity picked up, particularly in pre-Series A and Series A rounds, signalling renewed confidence in early-stage ventures.

Focus on profitability

In 2024, the Indian start-up ecosystem witnessed a fundamental shift from cash burn to profitability, with businesses focusing on sustainable growth instead of hyper-scaling. After years of aggressive expansion fuelled by venture capital, start-ups across sectors embraced cost optimization and efficiency to secure long-term stability.

Notable examples include Urban Company, which turned operationally profitable, signalling maturity in the gig economy sector. Yulu, a leading micro-mobility platform, achieved EBITDA positivity, showcasing its scalable and sustainable model. Other start-ups such as Swiggy and Zepto openly discussed their paths to profitability, emphasising disciplined spending and enhanced unit economics.

This shift reflects a maturing ecosystem where financial discipline and operational efficiency have taken precedence over the earlier obsession with growth at any cost.

Reduced regulatory bottlenecks

The abolition of the long-standing angel tax in Budget 2024 marked a significant relief for India's start-up and venture capital ecosystem. For years, start-ups faced regulatory hurdles and uncertainty due to this tax, which often created complexities in securing funding from investors.

This policy change removed a major bottleneck, fostering a more conducive environment for innovation and investment. By eliminating this tax, the government signalled its support for the start-up ecosystem, encouraging both domestic and international investors to back early-stage ventures without apprehensions.

The retail turnaround

The quick commerce industry continued its rapid evolution in 2024, solidifying its position as one of India’s most dynamic sectors. Despite being just four years old, the market has grown significantly, with Redseer projecting a 75-85% increase in the Q-commerce market for FY2025, reaching an estimated gross merchandise value (GMV) of around $6 billion.

Previously dominated by Blinkit, Instamart, and Zepto, the sector saw new entrants this year, intensifying competition. Flipkart made its fourth foray after three failed attempts into the space by launching Flipkart Minutes. BigBasket also expanded its footprint with the introduction of BBNow, entering the 10-minute delivery race and leveraging its established supply chain.

This expansion underscores the increasing appetite for quick commerce among urban consumers, driven by convenience and immediacy.