The Startup Rollercoaster: Wins, Challenges, and What’s Ahead for 2025

Reflect on the highs and lows of India’s startup ecosystem in 2024. From funding rebounds to mental health concerns, discover what’s shaping 2025.

When I was tasked to reflect on what the year was like for startups in India, our immediate thought was that it was no less than a rollercoaster. This is for a couple of reasons—we kicked off the year on a sour note, filled with the overhang of a harsh funding winter that had gripped the ecosystem in late 2023. Many startups were forced to rethink their growth strategies, focusing more on profitability than on the traditional growth-at-all-costs mantra.

However, as the months progressed, green shoots of recovery began to appear. Sectors like climate tech, fintech, and SaaS saw renewed interest, driven by innovation and the promise of long-term value creation.

It was also the year of IPOs—with many late stage startups listing on the market, by some estimates, atleast 12 companies listing on the bourses. At WeWork Labs, we thought it would be pertinent to take a look at the year past and take stalk of the wins, losses, as we look ahead to 2025 with a renewed, fresh perspective.

Wins of 2024

Funding While the year was significant for late stage startups, it was also a great year for early stage funding. Funding across the ecosystem in the early stages in the first nine months of the year, brought in approximately $10.5 billion, compared to the $8.1 billion during the same period in 2023. This highlighted that the funding winter was well behind us. 

Sector-wise trends

This year was also the year of artificial intelligence—with investors backing artificial intelligence (AI) interest and deeptech start-ups with conviction— Indian AI startups raised approximately $747 million across 121 deals, despite being on a decline of 26% in value since the previous year. Deep tech also saw greater impetus this year, with startups picking up approximately $1.3 billion in funding.

Now that we’ve had a look at the highs, let’s take a moment to observe what were some challenges we had as an ecosystem along the way.

Challenges in 2024 Challenges in the funding landscape

While funding saw an uptick in August, investors are also exercising greater caution with their investments going forward into the next year. To counteract the period of inflated valuations during the pandemic, investors are now looking to back bets with a proven track record and are staying away from high-risk bets. Startups in India also faced a series of regulatory hurdles this year, and are likely to continue facing challenges due to the vast and complex landscape for regulations.

C-suite exits Some companies faced challenges at the leadership level and instability in their c-suite level, while others had to resort to shuttering their businesses after being unable to raise funds. For instance, social media app Koo, had to close their business after being unable to negotiate a deal with Daily hunt. One of Koo’s co-founders, Mayank Bidawatka, has now ventured into his own consumer tech startup Billion Hearts Software. The company raised $4 million this year which saw participation from General Catalyst and Athera Venture Partners.

Founder mental health Then comes the concern for founder mental health—as many as 68% of Indian entrepreneurs report experiencing severe stress, with burnout contributing to nearly one-third of venture failures, according to a report by YOURDOST. This could negatively impact the stability of the Indian startup ecosystem.

So, with that in mind, what lies ahead for 2025?

Also read : Common mistakes to avoid by startup founders

What lies ahead?

On the funding front, family offices are expected to have a critical role to play in 2025, particularly for startups that require greater guidance. Funding overall will likely see greater scrutiny going into 2025, as investors make more cautious decisions on which startups they are looking to back.

On the macro-level, the roll-out of 5G into Tier II and Tier III parts of the country is expected to have a greater ripple effect on digital adoption which could open up multiple barriers to scale that are currently present—like fintech, internet of things, among others. Going into the next year, startups will look to the Union Budget for more favourable reforms that ease doing business in the country.

What are your thoughts on how 2024 was for the startup ecosystem? Let us know! See you in the next WeWork Labs blog.