I have previously written that venture capital is a very interesting way for global investors to access the Indian growth story because India has such a large startup ecosystem, now the third largest in the world. VC is a great way of getting in early to the exciting firms that are building what is set to become the third largest economy in the world by 2030.

A major new report by a global consultancy has now been published which confirms the numbers behind this trend. The report by Bain & Company in collaboration with the Indian Venture Capital Association (IVCA) found that total funding for the Indian VC space surged in 2024, reaching $13.7 billion, a 43 per cent increase compared with the previous year.

There was also a 45 per cent increase in deal volumes with 1,270 transactions recorded. This growth confirms India’s position as the second-largest market for venture capital and growth funding in the Asia-Pacific region.

Investment activity experienced notable growth across various deal sizes and stages, while the average deal size remained consistent. Transactions involving small and medium-sized deals (under $50 million), which represented nearly 95 per cent of all deals, increased by 1.4 times. Meanwhile, larger deals exceeding $50 million nearly doubled in volume, reaching pre-pandemic levels.

Megadeals, ie those valued at over $100 million, saw a significant resurgence, with a 1.6-fold rise in activity. Investors concentrated on supporting high-quality companies that had successfully weathered the two-year funding downturn, further energising the startup ecosystem.

The consumer technology sector led the way, securing $5.4 billion in funding – more than double the amount raised in 2023. This sharp increase, driven by a fourfold growth in $100 million+ deals, was largely fuelled by substantial investments in quick commerce, edtech, and B2C commerce. Notable beneficiaries included Zepto ($1.4 billion), Meesho ($275 million), and Lenskart ($200 million).

The increase in funding activity is credited to supportive policy reforms designed to bolster India’s startup ecosystem. Significant steps, such as abolishing the angel tax, reductions in long-term capital gains (LTCG) tax rates, removing the National Company Law Tribunal (NCLT) process, and streamlining Foreign Venture Capital Investor (FVCI) registrations, have played a key role in boosting investor confidence.

“India’s evolving investment landscape reflects a strategic shift towards sustainable, long-term growth – focused on profitability, innovation, and regulatory alignment,” said Sriwatsan Krishnan, partner at Bain & Company. “Policy reforms have boosted momentum, and investors are increasingly backing companies that exhibit strong unit economics and resilience amid global macroeconomic trends.”

The report highlights that the top 10 most-funded startups made up 25 per cent of total venture capital inflows in 2024, with nine of these being consumer-oriented. This emphasises the sustained prominence of the consumer sector within India’s startup ecosystem.

India’s exit landscape experienced remarkable progress, with total exit values climbing to $6.8 billion in 2024. Public markets were a major contributor, accounting for three-quarters of the overall exit value. The number of initial public offerings saw an almost sevenfold increase, as multiple venture-backed companies successfully debuted on stock exchanges, further cementing India’s status as a maturing startup hub.