Indian startups raise $9.1 billion as AI drives 91% of deeptech investments

Indian technology startups raised $9.1 billion in 2025, marking a 23% year-on-year increase, as artificial intelligence emerged as the dominant force driving deeptech investment and broader ecosystem momentum.

According to a Nasscom-Zinnov analysis reported by The Hindu, AI accounted for 91% of deeptech funding, underscoring its growing role as the backbone of India’s next phase of innovation.

AI EMERGES AS CORE DRIVER OF FUNDING

Deeptech funding surged 37% to $2.3 billion in 2025, with AI-led investments powering the bulk of capital deployment. The shift reflects investor preference for scalable, commercialisation-ready ventures, even as funding becomes more selective and milestone-linked.

Rajesh Nambiar, President of Nasscom, said the ecosystem is entering a more disciplined phase. “AI is clearly at the centre of this transition, emerging as core infrastructure for India’s next innovation cycle,” he said.

The data signals a move away from broad-based capital deployment towards targeted bets on high-impact technologies.

EARLY-STAGE DEALS AND M&A ACTIVITY PICK UP

Despite tighter funding conditions, early-stage activity remains robust. Seed and early-stage deals accounted for 74% of total funding activity, indicating continued investor interest in emerging ventures.

At the same time, consolidation is accelerating. More than 140 mergers and acquisitions were recorded in 2025, nearly doubling compared to the previous year, reflecting a maturing ecosystem where scale and integration are becoming critical.

SELECTIVE CAPITAL AND ECOSYSTEM MATURITY

The report highlights a shift in investor behaviour, with capital increasingly flowing into ventures that demonstrate clear pathways to commercialisation, strong infrastructure readiness, and access to talent.

India’s startup base, estimated at between 31,000 and 34,000 firms, is also becoming more concentrated in established hubs and proven sectors, suggesting a move towards efficiency and depth over rapid expansion.

The evolution points to an ecosystem transitioning from growth-at-all-costs to disciplined, performance-led scaling.

While funding levels have recovered, the next phase will depend on how effectively startups translate AI-led innovation into market-ready products, intellectual property, and globally competitive platforms.

As AI continues to reshape business models and investment priorities, India’s startup ecosystem appears to be entering a more structured phase—where capital, capability, and commercial outcomes are increasingly aligned.