VC Investments in India Slow Down in Q3, Yet Macros Still Strong and Capital Markets Vibrant: Report According to KPMG, India possesses strong macros and a vibrant capital market, so when trade uncertainties are resolved, optimism should prevail, and VC investment should begin to rebound. IPO activity is also expected to continue its run for the next few quarters in India.

Venture Capital (VC) investments in India slowed down in the third quarter of 2025 (Q3 25) amid an uncertain geopolitical environment, according to a KMPG Q3'25 Venture Pulse Report.

The slowdown was driven in large part by global geopolitical uncertainties and significant trade tensions with the US, according to the report, which said that "while interest in India remains high, VC investors have found it difficult to predict what might happen day-to-day, leading them to hold back from making any major funding decisions."

Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India, added that VC investment results in India this quarter were driven by the speed bump that was the US tariffs, but it is expected that by the end of November, the trend will settle.

"And macros are still strong, the capital markets are still vibrant, and a lot of capital has been raised that will need to get deployed, so funding should increase as uncertainties calm. But investors are going to be focused heavily on path to profitability and cash flows because without those you won't get a capital market exit," said Poddar.

According to the report, India experienced a "banner quarter for exits" in Q3 25, with exit values soaring to levels not seen in at least seven years. Major markets close to India, such as Hong Kong and China, also continued to see rebounds in IPO activity - both listings and exit values both above 2024 numbers at the end of Q3 25.

Mitra, a consumer goods delivery-focused company, bagged the largest deal in the quarter in India, with a USD 140 million fundraise. The report added that despite soft VC activity in the quarter, there's still optimism in the market given the growth in startup exit activities - especially in terms of IPO exits. During Q3, IPO activity remained quite strong compared to previous quarters. Service rental portal Urban Company displayed a successful IPO performance on the Mumbai National Stock Exchange (NSE), with its shares rising by 74 per cent on its opening day.

Heading into Q4 25, KPMG highlighted that VC investments in Asia will most likely remain subdued, particularly in India's next-door neighbour, China, where economic recovery is expected to take its time. Companies with AI and deeptech capabilities will likely be the top priority for investors across the region, in addition to companies in crucial sectors like health and biotechnology.

According to KPMG, India possesses strong macros and a vibrant capital market, so when trade uncertainties are resolved, optimism should prevail, and VC investment should begin to rebound. IPO activity is also expected to continue its run for the next few quarters in India.

Over the years, India has also maintained consistency in financing value in the Asia Pacific (APAC) region, with trends nudging towards sectors such as AI, defence, and manufacturing receiving top financing support.

Top 10 financings in Q3'25 in Asia-Pacific included Porter in the number four position, with a company closing its extended series F round in September with a USD 110-110 million to its USD 200 million raise in May led by Kedaara Capital and Wellington Management. FAW Bastune, an advanced manufacturing company based out of Changchun, China, led the list with its USD 462 million round in the quarter.