Indian tech startups experienced a significant funding surge in 2025, with deeptech investments soaring as artificial intelligence (AI) continued to transform the sector. According to the latest Indian Tech Start-up Report from Nasscom and Zinnov, deeptech funding escalated by 37 percent year-on-year to reach $2.3 billion, outpacing the overall growth of venture capital investments in the country. This growth underscores AI’s role as the primary engine driving the startup ecosystem in India.
Overall, tech startup funding rose 23 percent to $9.1 billion during the year. This increase occurred even as investors became more selective and focused on milestones. The report highlights a transition from “volume-driven expansion” to “execution-led maturity,” indicating a shift in capital allocation towards validated, commercialization-ready ventures.
In 2025, India became home to over 4,200 deeptech startups, including more than 550 newly established ventures. AI leads this segment, representing 84 percent of deeptech startups and 91 percent of deeptech funding. The impact of AI extends across various sectors, including enterprise software, cybersecurity, defense, and industrial systems.
Rajesh Nambiar, president of Nasscom, noted that the ecosystem has entered “a more disciplined phase of growth,” emphasizing AI’s emergence as core infrastructure for the next wave of innovation. He stated, “This signals growing global confidence in India’s ability to build, deploy, and commercialize AI at scale across sectors ranging from enterprise software and cybersecurity to defense and industrial systems.”
Despite the positive trends, funding remains heavily concentrated in the early stages. Nearly 74 percent of total deals in 2025 occurred at the seed and early stages. However, a concerning statistic revealed that about 85 percent of seed-stage ventures failed to progress to Series A funding within five years. This points to a persistent gap between proof-of-concept achievements and scalable revenue generation.
Pari Natarajan, CEO of Zinnov, remarked that the challenge has shifted from merely creating startups to converting them into sustainable businesses. As India’s startup landscape continues to evolve, the emphasis will increasingly be on execution, operational efficiency, and the ability to turn innovative ideas into profitable enterprises.
As the Indian tech ecosystem matures, the focus on deeptech—particularly in AI—suggests a future where these innovations could lead to significant advancements across various industries. Investors and entrepreneurs alike will need to navigate this landscape with an eye toward creating scalable, revenue-generating businesses that can thrive in an increasingly competitive global market.
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