Venture capital funding in India fell in Q3 2025, while exit values reached a seven-year high, according to KPMG’s latest Venture Pulse report.
Startups in India raised US$3.2 billion across about 380 deals in Q3, down from US$14.7 billion over nearly 850 deals in Q3 2021.
Exit activity was led by IPOs, with Urban Company shares rising 74% on listing day.
More IPOs are expected soon, as companies like Meesho and Captain Fresh have submitted draft filings to India’s securities regulator.
KPMG said US tariffs on Indian exports contributed to the slowdown, though ongoing trade talks could impact future funding.
Globally, VC investment reached US$120 billion in Q3, with the US accounting for most of it. AI, defence, and space technology attracted significant interest from investors worldwide.
🔗 Source: The Economic Times
🧠 Food for thought
Implications, context, and why it matters.
The 50% tariff claim lacks proof and timing context
– India’s VC slowdown gets pinned on a 50% US tariff 1. The actual path was 10% baseline plus 25% from April 2025, then another 25% in late August tied to Russian oil 1.
– Talks in October 2025 aimed to cut rates to 15-16% 2. The top rate held for five weeks of Q3 from August 27 to September 30, which casts doubt that it alone drove the quarter’s funding slowdown 3.
– ClearTax, a tax and compliance platform, says sectors are exempt including pharmaceuticals 3. India’s generic makers supply nearly 50% of the US market 3. Textiles and gems face the brunt, with jewellery and auto parts also affected 3.
IPO exits open a services window for software vendors and professional firms
– IPO exits reached a seven-year high as 26 startups filed Draft Red Herring Prospectuses with the Securities and Exchange Board of India (SEBI), the country’s capital markets regulator 4. Groww and PhysicsWallah filed DRHPs, while PhonePe is preparing to file 4. That opens a lane for B2B software vendors and professional services to pitch IPO-bound firms 4.
– Pre-IPO teams need compliance software and investor relations platforms 4. They also require financial reporting tools and cybersecurity solutions as they shift to public markets 4.
– SEBI’s typical 30-day review timeline gives a clear window 5, while the 12-month launch window after approval sustains demand for post-listing tools such as governance software and public market analytics 6.
