Venture Capital

Mind the gap: India’s startup ecosystem adapts as time from Seed to Series A widens

Sai Keerthi

Nikhil Patwardhan

March 10, 2025 | 12 Min Read

The gap between Seed and Series A, as well as Series A to Series B, has widened significantly, forcing India’s startup ecosystem to adapt. While founders focus on building more sustainable businesses, VCs are reassessing their exit strategies as securing follow-on capital becomes challenging.

Key Takeaways

India's funding landscape has become more challenging, with longer gaps between Seed, Series A, and Series B rounds, forcing startups to prove revenue potential early
Investors are now favouring capital-efficient businesses over heavily-funded ventures, leading to a decline in valuations and more scrutiny on unit economics
Exits have become harder due to delayed funding cycles, pushing VCs toward secondary sales and alternative strategies to return capital to their LPs
This has seen secondary-focused funds gain prominence, with the Indian government also reportedly considering launching its own

In September 2021, just months after Zomato went public, two Mumbai-based friends—one a software engineer, the other a business graduate—met on a Friday evening to discuss a startup idea they had contemplated for years.

Having just witnessed the foodtech’s public market success and the Indian startup ecosystem’s surge in funding, they believed the timing was perfect to finally start up.

“Every day, we read about new unicorns and massive investments pouring into India’s startup ecosystem,” the engineer recalled. “We had a solid concept, an execution plan, and all we needed was capital. Investors were bullish on India, so we decided to take the plunge.”

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