Flush with funds, starved of conviction: Inside the Great Indian startup pause

India’s startup economy was once a story of relentless motion—from dorm-room ideas to decacorns, from SoftBank bets to Nasdaq dreams. But in 2025, the momentum has dulled. In the first five months of this year, Indian startups raised just $5.8 billion in equity funding, per Tracxn—the weakest start in nine years.

It’s not just the number. It’s what it signals.

From 2020 to 2022, startups in India were riding a high. Capital was flowing freely, and the mood was bullish. The pandemic had digitised behaviour, startup valuations were booming, and global investors competed to write big cheques. But today, even as dry powder accumulates and pitch decks circulate, the market feels stuck. Founders are cautious. Investors are hesitant. The sense of inevitability—that India’s tech ecosystem was always a year away from greatness—has been replaced by silence.