New Delhi, March 11 : India’s venture capital (VC) ecosystem demonstrated a strong recovery in 2024, with total funding reaching $13.7 billion, reflecting a 43 per cent increase compared to 2023, according to a report by global consultancy Bain & Company released on Tuesday.
Deal activity surged, with 1,270 transactions recorded, marking a 45 per cent rise in deal volumes. This resurgence reinforces India’s position as the second-largest market for venture capital and growth funding in the Asia-Pacific region, especially in the context of 2024 funding in the region remaining largely in line with 2023, the report states.
Deal volumes increased across deal sizes and stages, while average deal size remained stable.
Small and medium-ticket deals (< $50 million), which made up around 95 per cent of the deals, increased by ~1.4x, whereas $50 million+ deals nearly doubled, rebounding to pre-pandemic levels as high-quality assets attracted deployments.
Megadeals ($100 million+) also rebounded with 1.6x increase in volumes as investors backed high-quality companies that successfully weathered the two-year funding winter, the report said.
Policy reforms such as eliminating the angel tax, reducing Long-Term Capital Gains (LTCG) tax rates, removing the National Company Law Tribunal (NCLT) process, and simplifying Foreign Venture Capital Investor (FVCI) registrations signalled positive momentum for the Indian start-up ecosystem and funding, according to the report.
“India’s evolving investment landscape reflects a strategic shift towards sustainable, long-term growth — focussed on profitability, innovation, and regulatory alignment, with policy reforms boosting momentum and funding. Investors are increasingly backing companies that exhibit strong unit economics and resilience in the face of global macroeconomic trends,” said Sriwatsan Krishnan, partner at Bain & Company.
“The top 10 most-funded companies commanded a quarter of total VC inflows – nine of them being consumer-focussed, underscoring the sector’s dominance in India’s evolving startup landscape,” Krishnan added.
According to the report, tech-first sectors including consumer technology, software and SaaS (software-as-a-service), and fintech, continued to lead, securing over 60 per cent of the total funding.
Consumer technology emerged as the dominant sector, attracting $5.4 billion in funding, more than double compared to 2023 with a 4x surge in $100M+ deals.
The sharp growth was driven by significant investments in quick commerce, edtech, and B2C commerce, with companies such as Zepto ($1.4 billion funding in 2024), Meesho ($275 million), and Lenskart ($200 million) securing major funding rounds.
The sector’s rapid expansion reflects a clear investor preference for scalable business models with a demonstrated path to profitability.
Software and SaaS funding (including generative AI) sustained funding momentum with a rise of 1.2x to $1.7 billion, fuelled by customer spending on development and testing tools and maturing international go-to-market strategy playbooks, the report states.
Traditional sectors also saw significant traction, with BFSI and consumer/retail investments witnessing a 3.5x and 2.2x rise, respectively.
The growth in BFSI was largely fuelled by investments in affordable housing finance and green financing initiatives, while consumer and retail attracted capital in F&B and fashion.
India’s exit landscape also saw a rise in activity, as exit values reached $6.8 billion in 2024. Public markets played a dominant role, accounting for three-fourths of the exit value. IPOs surged ~7x as several venture-backed companies successfully listed, further strengthening the country’s reputation as a maturing startup ecosystem, it pointed out.
The report concludes that India’s venture capital market is entering a phase of disciplined growth, where investors are prioritising financial sustainability, operational excellence, and clear exit pathways.
The broader ecosystem is expected to continue maturing with an increasing concentration of capital toward businesses with strong governance, scalable operations, and sustainable growth models. (IANS)