After years of muted activity in India’s growth-stage funding market, Series B and C rounds are showing strong signs of capital consolidation this year, even as overall funding continues to dip. Data from Tracxn shows that while deal volumes are shrinking across stages, cheque sizes are rising primarily in growth-stage rounds. This suggests that once the early bets are made, investors are backing fewer companies but with greater conviction.
In Series B rounds, the number of deals dropped sharply to 108 so far this year from 124 in 2023, continuing the downturn that began after 2021’s funding boom. Yet, total capital invested surged from $1.3 billion two years ago to $1.8 billion this year. Similarly, while there were only 50 Series C rounds this year, compared to 72 in 2023, the total capital invested remained the same, around $1.1 billion.
Flight to Quality
This divergence between deal count and funding value signals a flight to quality, investors say. “Startups now need to demonstrate real product–market fit, strong customer cohorts, and a clear path to scale before they can raise larger rounds. Overall, the bar for Series B and C funding has become significantly higher,” says Avik Ashar, Principal at Riverwalk Holdings, which focuses on growth-stage investments.
He added that some of the mid-market PE firms, which are evaluating Series C startups, expect very tight controls on where money is being spent. “What we’re seeing is a natural consolidation of capital, where more money is flowing into the right kind of companies.”
This structural gap in India’s growth-stage market has persisted for the last few years. While early-stage capital is abundant thanks to domestic VC funds and family offices, and late-stage capital continues to come from larger domestic funds and global investors, the middle has often lacked consistent depth.
That’s beginning to change, say investors. “Over the past 12–18 months, capital deployment has become far more intentional, and investors are moving away from high-velocity cheque writing,” says Sagar Agarvwal, founder and managing partner, Beams Fintech Fund, which invested in a $70-million Series C round in Insurance Dekho earlier this year.
Category Leaders and Sectoral Consolidation
This change, he added, naturally leads to fewer Series B and C rounds but with larger cheque sizes. “We’re also seeing consolidation in categories like fintech, insurance, mobility, and SaaS, where leaders are breaking out distinctly. Capital is flowing disproportionately toward these category winners.”
Navin Honagudi, managing Partner at Elev8 Venture Partners, echoed this sentiment. He believes that as India’s ecosystem is maturing, many sectors now have emerging category leaders. Mid-stage investors prefer to underwrite these leaders more aggressively rather than spread capital across many uncertain bets. Earlier this year, in October, Elev8 invested in a $115 million Series B round in consumer lending startup Snapmint.
Besides Snapmint, India’s growth-stage funding saw a few other standout deals this year. Among Series B rounds, the parent of stockbroking app Dhan, Raise Financial Services, raised a $120 million round from Hornbill Capital and MUFG, followed by aerospace startup Raphe mPhibr’s $100 million round, Spotdraft’s $54 million, and Zolve’s $51 million. Series C rounds were led by InsuranceDekho, which raised $70 million, followed by pharmacy app Truemeds raising $65 million, and jewelry startup GIVA raising $61.5 million.