New Delhi [India], April 4 (ANI): India's Venture Capital (VC) and growth funding ecosystem continued to expand in 2025, with investments rising to around USD 16 billion, marking the second consecutive year of growth, according to the India Venture Capital Report 2026 released by Bain & Company.

The report highlights that the growth comes despite a slowdown in broader private capital markets, underscoring sustained investor confidence in India's start-up ecosystem and macroeconomic fundamentals.

'India's Venture Capital (VC)/growth equity market continued its upward trajectory in 2025, reaching approximately $16 billion and logging its second consecutive year of growth,' the report said.

It noted that this performance was particularly significant as overall private capital deployment remained soft globally. 'This performance was especially notable against the backdrop of softer deployment across private capital overall,' the report added.

According to the report, funding growth in 2025 was balanced between a rise in deal volumes and larger deal sizes, unlike the previous year, when volume largely drove the recovery.

'2025 saw more balanced growth across deal volume and average deal size,' with larger funding rounds rebounding, particularly in software-as-a-service (SaaS) and fintech segments, the report said.

Fintech emerged as one of the strongest-performing sectors during the year, with deal value more than doubling year-on-year as investors backed scalable platforms and new business models.

'Fintech posted one of the year's strongest rebounds, with deal value more than doubling year over year,' the report noted.

The report also highlighted the growing role of India's digital infrastructure in attracting investor interest, particularly in wealthtech platforms that cater to retail investors and the emerging mass affluent segment.

'Wealthtech emerged as a key theme, supported by increased adoption of India's digital public infrastructure (DPI) rails, rising household savings, and a growing preference for goal-based investing, particularly among the mass and mass affluent segments,' it said.

Investment momentum was also strong in software and SaaS companies, particularly those integrating artificial intelligence into their offerings.

'Funding in software/SaaS increased approximately 1.5x year over year,' as mature companies returned to the market with AI-led product innovation and global expansion plans, the report said.

Artificial intelligence emerged as a key theme across sectors, with investors backing both AI-native startups and companies embedding AI into enterprise workflows.

'AI/generative AI-native companies continued to attract capital, with funding rising 1.5x year over year,' particularly in sectors such as banking, financial services, insurance, and healthcare, the report said.

The report further highlighted improved exit opportunities for investors, supported by strong equity markets and regulatory easing.

'IPO-led liquidity events gained share, while strategic sales rebounded sharply from 2024 lows,' it said, with fintech and consumer tech accounting for the majority of exits.

The report further added, 'India's VC/growth ecosystem continued to mature, marked by disciplined capital deployment, increased comfort with exit pathways, and clearer visibility into durable value creation.'

The report expects investment activity to increasingly focus on structural themes such as artificial intelligence, deeptech, climate technologies, and industrial innovation in the coming years. (ANI)