Venture capital investment in the Indian startup ecosystem remained slow during the third quarter (July-September) of 2025, even as overall global investments crossed $100 billion for the fourth consecutive quarter amid an uncertain larger geopolitical environment.
While VC funding slowed, the country reported a strong quarter for exits, with values surging to a record seven-year high, according to the second edition of KPMG Private Enterprise’s Venture Pulse, a quarterly report tracking global investment trends.
During the third quarter, startups in India raised $3.2 billion in funding across around 380 deals, compared to $14.7 billion across nearly 850 deals in the same quarter of 2021, the report said. Peak XV-backed logistics startup Porter secured $310 million in its series F round, ranking it as Asia’s fourth-largest funding round in the third quarter of this year, as per the report.
The report said startup exit activity was led by initial public offering (IPO) exits, at a time when the country saw strong IPO activity in comparison with previous quarters.
Rent-a-service startup Urban Company’s shares surged 74% on listing day.
More IPOs are expected in the coming quarters. Consumer tech startups such as Meesho and Captain Fresh have filed draft papers with market regulator Securities Exchange Board of India (Sebi) to go public.
The report noted that the slowdown in funding was driven by tariffs imposed by the United States (US) on India. Indian exports currently face a 50% tariff, though trade negotiations are ongoing between the two nations to reduce the rates.
“VC investment results in India this quarter were driven by the speed bump that was the US tariffs, but people expect that by the end of November that will settle,” said Nitish Poddar, partner, private equity, KPMG in India. “But investors are going to be focused heavily on the path to profitability and cash flows because without those you won’t get a capital market exit.”
Overall VC trends
Global VC investment rose to $120 billion in the third quarter, with an increasing number of exits and continuing euphoria around artificial intelligence (AI).
The second quarter had reported investment worth $112 billion, as per the report.
The Americas (North and South America), which led the trend, reported $85 billion in funding across 3,474 deals. The US accounted for the majority, with $80.9 billion across 3,175 deals.
In the overall share of funding, Europe attracted the second-highest investment during the quarter, reporting $17.4 billion across 1,625 deals, pushing Asia to third place with $16.8 billion, the report noted.
Experts believe this interest in investments was led by the worldwide AI wave.
“AI is obviously the biggest ticket right now for VC investors globally. If startups aren’t embracing AI in some way, shape, or form, it’s very difficult for them to attract attention,” said Conor Moore, global head, KPMG Private Enterprise, KPMG International.
Outlook
The report observed that global VC investment is expected to remain stable in the coming quarters, with AI continuing to dominate. Sectors such as robotics and defence tech will remain focus areas.
The last time the global VC market saw $100 billion or more in investment for four quarters in a row was between the fourth quarter of 2021 and third of 2022.
“Beyond AI, defence technology and space technology garnered significant attention during the quarter, largely due to persistent geopolitical tensions,” the report said.
Sectors such as health technology, quantum computing, and alternative energy also maintained strong investor interest throughout the third quarter of 2025, the report noted.
With India’s strong economy and active capital markets, investors are optimistic that VC funding will pick up once trade uncertainties ease, the report added.
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