Tech startup funding propels India to 3rd globally — Ad industry eyes comeback

India’s tech startup ecosystem has kicked off 2025 on a strong note, emerging as the third-highest funded country globally in the first quarter. 

With $2.5 billion (?20,750 Cr) raised, India sits behind only the United States and the United Kingdom. This performance marks a 13.6% increase over the $2.2 billion (?18,260 Cr) raised in Q4 2024, and an 8.7% jump from Q1 2024, signalling renewed investor confidence and resilience in the Indian innovation landscape,  according to the latest funding data by Tracxn shared with e4m. 

Driving this upswing was a sharp rise in late-stage funding, which totalled $1.8 billion ( ?14,940 Cr) in Q1 2025 — a 38.5% increase quarter-over-quarter and a staggering 114.5 % rise year-over-year. This suggests that mature startups are regaining momentum and may be preparing for expansion, acquisitions, or even IPOs.

In contrast, Seed Stage and Early Stage firms saw a funding drop of over 23% compared to Q4 2024, and a drop of 55% compared to Q1 2024. This cautious approach at the early end of the spectrum reflects investor prioritization of profitability and market readiness, following a phase of unchecked exuberance.

A significant highlight was the dominance of Auto Tech, which drew $1.1B, a 400 %+ jump, thanks to major deals like Erisha E Mobility’s $1B round. However, early and seed-stage investments declined notably, hinting at ongoing caution in backing emerging ventures. Sectors like Enterprise Applications and Retail remained robust, though slightly below their year-ago benchmarks.

Meanwhile, the quarter saw no new unicorns, a clear sign that while capital is returning, valuations remain under scrutiny.

This development is expected to have a downstream impact, particularly in the advertising and B2B services sector, which have been reeling under pressure, grappling with economic uncertainties, shifting consumer behavior, and increased scrutiny on performance-based ROI, industry experts say. 

The influx of more capital could offer much-needed relief and new growth opportunities. If current trends hold, Q2 and Q3 of 2025 may witness a reinvigorated ad market, with fresh players emerging as key spenders, potentially reshaping brand visibility dynamics across sectors, experts noted. 

“Late-stage funding is often followed by an aggressive push on customer acquisition and brand building. This is good news for B2B media, marketing platforms, martech firms, and even event organizers who cater to high-growth brands”, says a media agency official.

Top 10 deals

In Q1 2025, India’s tech ecosystem saw several standout funding deals. 

Leading the pack was Erisha E Mobility with a substantial raise of $1 billion, followed by Darwinbox ($140 million) and Infra.Market ($121 million). 

Udaan secured $75 million, while InsuranceDekho brought in $70 million. Other notable deals included SpotDraft ($54 million), Cashfree Payments ($53 million), Zolve ($51 million), Zeta ($50 million), and Geniemode ($50 million), reflecting a growing investor focus on enterprise tech, fintech, and EV infrastructure.

A surge in advertising dollars?

Post-pandemic, leading tech startups emerged as some of the biggest advertisers, fueling India's ad market revival with massive marketing budgets. Many became sponsors of marquee events such as the Indian Premier League (IPL) — a move previously reserved for legacy FMCG and telecom giants.

However, as the funding environment tightened through 2023 and early 2024, many of these brands pulled back, shelving sponsorship deals and cutting digital ad spends. The ad market felt the heat as D2C brands, once bullish on visibility, suddenly turned cautious. 

However, the more investment in India's celebrated startup ecosystem will energise the advertising ecosystem, especially the digital one, which is likely to get the lion’s share of ad dollars in the coming months, many industry leaders believe. 

Sachin Kumar, Founder of BottleOpeners, said, "In today’s volatile market, funding gives brands the firepower to scale—but spend decisions are becoming more calculated. Performance marketing will see a clear boost as startups prioritise measurable returns. Brand-building will still matter, especially in trust-driven categories like FMCG, where platforms like YouTube and Amazon Display play a key role.”

 We’ll also see more investment in content marketing, particularly video, to drive awareness and consideration across touchpoints, Kumar noted. 

The latest Tracxn report reaffirms that investor confidence is squarely behind late-stage startups, with a 100%+ YoY jump in funding, Nimesh Shah, Head Maven, Windchimes Communications, said. “These ventures, now close to IPO, are expected to maintain or even increase their advertising spends—focusing on performance-led digital campaigns to drive customer acquisition and revenue growth,” Shah noted. 

He added that spending on experimental or brand-heavy marketing is likely to be scaled back, given the current market volatility and ROI pressures.

Krishna Iyer, Director of Marketing at MullenLowe Lintas Group, however, has a different point of view. He opines, “The report reveals a mixed funding landscape. There is a waning appetite for early innovation. Investment focused on SaaS, FinTech, HealthTech, and Cleantech, reflecting a shift towards stable sectors amid global uncertainty.”

India's startup ecosystem remains inward-looking, lacking global disruptors like Tesla or TikTok. It limits our soft power and advertising narratives' relevance globally. Without bold innovation, India risks being a spectator in the global startup conversation, he quips. 

Echoing the sentiments, Prasanna Iyer, CEO of Rezilient Digital, says, “While the late-stage funding boom looks good and may drive big ad spends in fintech and e-commerce, especially programmatic and digital, will benefit. But the drop in seed and early-stage funds is a wake-up call.”

We must back these young innovators with ad credits and incubator tie-ups to keep the startup ecosystem buzzing with creativity and diversity. If we don’t have a great pipeline especially in a gen AI era, it is worrisome especially from an overall POV as well as what it means for the advertising business, Iyer said.