Weekly Startup Funding Roundup (April 12–18): VC Inflows Dip to Second Lowest in 2025

India’s startup ecosystem witnessed a steep drop in venture capital funding during the week of April 12–18, marking the second lowest weekly inflow of the year. According to YourStory Research, startups in the country raised just $62 million across 23 deals, a sharp decline compared to the $209 million raised in the previous week.

This slump in startup funding reflects continued macroeconomic pressures and investment caution, both globally and domestically. The broader sentiment among investors appears to be one of risk aversion amid geopolitical tensions, tariff uncertainties, and concerns about a slowing Indian economy.

Funding at a Yearly Low

This is only the third time in 2025 that total VC investment for a week has fallen below the $100 million mark. The only lower point was recorded in the first week of January, when startups could raise just $14 million. This week’s figure indicates that investor sentiment remains fragile.

Even among the 23 deals this week, only two startups secured more than $10 million in funding—a strong signal that large-ticket deals remain elusive. For many early- and growth-stage startups, the capital crunch continues to impact runway, hiring, and expansion plans.

External and Internal Pressures Weigh Heavy

The tariff disputes between major global economies have begun to create ripple effects in developing markets like India. Additionally, with India’s own economic growth showing signs of moderation, venture capital firms are exercising caution.

As fundraising cycles lengthen and valuations stabilize or even compress, startups are being forced to focus on profitability and operational efficiency. The go-for-growth-at-any-cost model is being replaced by a leaner, survival-driven approach.

Hope in the Long Term: IPO Moves and Institutional Maturity

Despite the current dip, the long-term outlook for Indian startups remains strong. Notably, PhonePe and Razorpay have advanced efforts to transform into public limited companies, setting the stage for potential IPOs. Such moves indicate that some of India’s most successful startups are maturing and preparing for exits through public markets.

This shift could gradually rebuild investor confidence by showcasing exit opportunities—a key factor in VC funding decisions.

Spotlight Deals This Week

While overall funding volume was muted, a few notable transactions stood out:

• 🚁 Drone tech startup Garuda Aerospace secured ₹100 crore (~$11.6 million) in a round led by Venture Catalysts. The startup focuses on commercial drone applications across agriculture, defense, and infrastructure.

• 🏭 OfBusiness, the B2B commerce giant, also raised ₹100 crore (~$11.6 million) from Cornerstone Ventures. The capital will help OfBusiness further consolidate its operations and credit offerings to SMEs.

• ⚙️ Optimized Electrotech, a deeptech company specializing in surveillance and sensor technology, raised $6 million in a round led by Blume Ventures and Mela Ventures.

• 🔧 Magma, a B2B supply chain startup, brought in $5 million from a clutch of investors, including Capria Ventures, General Catalyst, Accion Venture Lab, WEH Ventures, and Avinya Ventures.

These deals show that selective bets are still being made, particularly in deeptech and B2B commerce—sectors that offer long-term defensibility and scalability.

Concerns in the Ecosystem: BluSmart Case

On the other end of the spectrum, developments surrounding mobility startup BluSmart have raised red flags within the ecosystem. Though details remain unclear, the episode has cast a shadow over the otherwise resilient Indian startup narrative. Such incidents reinforce the need for strong governance and ethical leadership as startups scale rapidly.

Looking Ahead: Signs of Recovery?

The current downturn in VC funding is unlikely to reverse immediately. However, there is optimism that as macroeconomic stability returns and IPO activity picks up, funding momentum could improve in the second half of 2025.

In the meantime, startups will likely continue focusing on:

• Cutting operational costs

• Prioritizing customer retention

• Improving unit economics

• Building sustainable business models

These adjustments, while painful in the short term, may actually strengthen the ecosystem over time by promoting discipline and innovation.

Conclusion

The week of April 12–18 was a tough one for Indian startups, with VC inflows hitting their second-lowest level in 2025. Yet, amidst these challenges, a few high-potential companies managed to secure funding, and industry leaders are pushing toward public listings.

As the ecosystem matures, these ups and downs are part of a larger cycle. The resilience of Indian founders, along with institutional interest in long-term value, could eventually pull the ecosystem out of the funding slump—and into a more sustainable growth phase.