India’s venture capital (VC) ecosystem witnessed a strong resurgence in 2024, with total funding reaching $13.7 billion—a 43% increase compared to the previous year, according to a report by global consultancy Bain & Company released on Tuesday.

 

The report highlights a sharp rise in deal activity, with 1,270 transactions recorded, marking a 45% increase in deal volumes. This growth solidifies India’s position as the second-largest market for venture capital and growth funding in the Asia-Pacific region, even as overall funding in the region remained largely stable compared to 2023.

 

Investment activity surged across various deal sizes and stages, while the average deal size remained steady. Small and medium-sized deals (below $50 million), which accounted for nearly 95% of total transactions, grew by 1.4 times, while larger deals exceeding $50 million nearly doubled, returning to pre-pandemic levels.

 

Megadeals—transactions valued at over $100 million—also made a strong comeback, with a 1.6-fold increase in volume. Investors focused on backing high-quality companies that successfully navigated the two-year funding downturn, further driving momentum in the startup ecosystem.

 

Consumer technology emerged as the dominant sector, attracting $5.4 billion in funding—more than double the amount raised in 2023. The sharp rise, driven by a fourfold surge in $100 million+ deals, was largely attributed to significant investments in quick commerce, edtech, and B2C commerce. Companies like Zepto ($1.4 billion), Meesho ($275 million), and Lenskart ($200 million) were among the major beneficiaries.

 

The software and SaaS (software-as-a-service) sector, including generative AI startups, continued to attract strong investor interest, with funding rising by 1.2 times to $1.7 billion. This was fueled by growing customer spending on development and testing tools, as well as the maturation of international go-to-market strategies.

 

Traditional sectors also experienced notable traction. Investments in banking, financial services, and insurance (BFSI) grew by 3.5 times, driven by affordable housing finance and green financing initiatives. Meanwhile, the consumer and retail segment saw a 2.2-fold increase, with capital flowing into food and beverage (F&B) and fashion businesses.

 

The report attributes the surge in funding activity to favorable policy reforms aimed at strengthening India’s startup ecosystem. Key measures, including the removal of the angel tax, reductions in long-term capital gains (LTCG) tax rates, the elimination of the National Company Law Tribunal (NCLT) process, and the simplification of Foreign Venture Capital Investor (FVCI) registrations, have contributed to improved investor confidence.

 

“India’s evolving investment landscape reflects a strategic shift towards sustainable, long-term growth—focused on profitability, innovation, and regulatory alignment,” said Sriwatsan Krishnan, partner at Bain & Company. “Policy reforms have boosted momentum, and investors are increasingly backing companies that exhibit strong unit economics and resilience amid global macroeconomic trends.”

 

The report also notes that the top 10 most-funded startups accounted for 25% of total VC inflows in 2024, with nine of them being consumer-focused. This underscores the sector’s continued dominance in India’s startup ecosystem.

 

India’s exit landscape also witnessed significant growth, with total exit values reaching $6.8 billion in 2024. Public markets played a crucial role, accounting for three-fourths of total exit value. The number of initial public offerings (IPOs) surged nearly sevenfold, as several venture-backed companies successfully listed on stock exchanges, further reinforcing India’s reputation as a maturing startup ecosystem.

 

-IANS