By bizn_fun 
According to Neha Singh, co-founder of Tracxn, even as mature start-ups go public, fewer Indian start-ups overall are having to wind up or go back to the drawing board – an encouraging trend.
This is possibly as more founders increasingly prioritise “sustainability, profitability, and disciplined capital use over aggressive expansion”, said Neha Singh.
Tracxn data shows just 724 start-ups shut down so far in 2025 a decline of 81% compared to over 3,900 startups downing the shutters during the same period in 2024, a figure which was itself down on earlier years in the decade.
The sector is transitioning from “rapid growth” to “strategic sustainability”, Neha Singh said.
But even as more founders raise money through IPOs, private equity and venture capital funding into new companies hasn’t returned to Covid-era highs.
At $9.8bn, funds raised by India’s tech start-ups in 2025 are still a shadow of the $40bn raised in 2021, and marginally lower than last year’s $12.6bn.
“We’ve moved from a phase of exuberance to one of thoughtful capital deployment. Deal volumes may be lower than the peak years, but the quality of companies being funded is higher,” says Mr Daniel.
While founders who have focused on quality, profitability and governance will continue to find capital, the market has become more discerning, adds Mr Daniel, “which is ultimately good for founders building for the long term”.
But recent policy measures, such as the abolition of an angel tax, are expected to further strengthen investor confidence in India.
As for start-up IPOs, could the momentum continue next year?
“The capital markets are inherently cyclical and it is impossible to say whether 2026 will be the same,” says Shailendra Singh.
For now, though, private investors are making hay as the public markets lap up stakes in the start-ups they placed early bets on.
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