CXOToday has engaged in an exclusive interview with Neha Singh, Co-Founder and CEO, Tracxn
- How do you expect funding to evolve in 2025?
We have been closely observing the funding trends, and while the Indian startup ecosystem has faced its share of challenges since 2022 due to factors like rising interest rates, geopolitical tensions, and global economic uncertainties, we have also seen incredible resilience. In 2024, there were signs of recovery, and as we move into 2025, I am optimistic that the momentum will continue. India’s economy is projected to grow at around 6.4%, which provides a strong backdrop for further growth in venture capital investments.
One of the trends we anticipate is the surge in funding for startups leveraging Artificial Intelligence. At Tracxn, we have witnessed how AI is transforming sectors like healthcare, finance, and sustainability. It’s no longer just a buzzword; it’s enabling businesses to enhance efficiency, cut costs, and make smarter, data-driven decisions. Investors are being drawn to its potential, and we expect this to drive substantial funding in the coming year.
Another thing we are tracking is the shift in investor priorities. The focus on profitability and sustainable business models, which became prominent in 2024, is here to stay. Startups focusing on stronger unit economics and minimizing cash burn will stand a better chance of securing funding. Investors’ focus has shifted from speculative growth and concentrating on businesses with strong financial strategies and long-term viability.
- Which sectors will drive funding growth?
As we look ahead to 2025, we believe that sectors like AI, retail, and food & agriculture tech will continue to see significant funding growth. Artificial intelligence is poised to be a major driver, particularly in industries like healthcare, finance, and sustainability.
Retail is also likely to grow with emerging trends like e-commerce and beauty tech seeing substantial investments. The growth in D2C brands and beauty tech startups in particular is something we’ve been keeping a close eye on.
Another sector that’s showing potential is food & agriculture tech. We expect to see continued investment, particularly in areas like ultrafast grocery delivery and aquaculture tech, as these segments evolve and meet the growing demand for sustainable solutions. I believe continuous innovation in these sectors is a key factor in driving funding interest.
- Which trends or technologies will dominate the landscape in 2025?
In 2025, we are likely to see several emerging trends and technologies shaping growth and innovation across industries. As the funding landscape recovers, we expect a rise in venture capital investments. Investors are becoming more optimistic about high-growth startups, especially those with strong business models and technology-driven products.
AI is definitely going to be a big focus area. Startups leveraging AI, particularly healthcare, finance, and sustainability are likely to continue attracting significant funding. With rapidly evolving AI capabilities, this space will remain a top priority for investors.
What’s important to know is that there is a shift in investment behaviour. Investors are increasingly focused on startups with strong financial strategies, profitable, and sustainable business models. Their emphasis is on long-term viability and reducing cash burn.
As for sectors, we see Deep Tech, Clean Tech, Artificial Intelligence, Defense Tech and Electric Vehicles (EVs) drawing more attention this year. At the same time, areas like Retail, Enterprise Applications, and Food & Agri Tech, which saw significant funding in 2024, will also likely continue to dominate this year.
- How will Generative AI applications impact various industries?
Generative AI is reshaping industries in profound ways and 2024 has been a crucial year for its growth in India. It’s fascinating to see how companies are leveraging Generative AI to automate tasks, reimagine content creation, and streamline workflows. Companies like Krutrim, Nurix AI, and Dashtoon are top-funded companies leading this space and their innovations are setting the tone for what’s possible. As more industries adopt this technology, I think we’re going to see not only enhanced productivity but also a shift in how businesses operate.
- What are your key takeaways from 2024, and how do you think they’ll impact the industry’s trajectory?
The year 2024 was a mixed bag for India’s startup ecosystem, marked by challenges at the start but significant recovery and milestones as the year progressed. The year began with a slowdown in funding due to global economic uncertainties, rising interest rates, and geopolitical tensions. These factors made investors more cautious, prioritizing startups with sustainable business models over those focused solely on high growth.
However, by mid-year, we saw signs of recovery. June saw a peak in funding at $1.66B. Investors’ interest shifted as they backed fewer startups but made larger investments in companies with strong fundamentals. Remarkably, the Indian startup ecosystem created 6 unicorns in 2024, compared to just 2 in 2023, reflecting renewed investor confidence about the market’s long-term potential.
One of the biggest policy changes in 2024 was the removal of the “angel tax” in July. This development made it easier for startups to attract foreign investments and reduced compliance burdens. When combined with government initiatives like Make in India and Atmanirbhar Bharat, the policy provided startups with a framework to scale and innovate.
As we look ahead, I see potential for growth in venture capital funding. Sectors like Deep Tech, Clean Tech, AI, Defense Tech, and Electric Vehicles are going to be the hotspots. Investors will stay focused on startups with profitable and scalable business models and AI-driven innovation is expected to gain an edge over competitors.
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