Last 90 Days Reveal | Issue 35

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	Forwarded this email? Subscribe here for more Decoding India’s VC Mindset: What the Last 90 Days Reveal About the New Investment Rationale Last 90 Days Reveal | Issue 35 Venture Unlocked and Shubham Oct 8   READ IN APP   The Macro Mood: Slower Money, Sharper Minds Between July and September 2025, India’s startup funding stood at roughly $2.1 billion across 240 deals — a 38 % YoY drop and the weakest quarter in two years. But beneath that slowdown lies a strategic recalibration, not a retreat. Rather than chasing growth at any cost, VCs are deliberately prioritizing capital efficiency, regulatory clarity, and defensible technology. The funding winter is forcing sharper discipline — and, paradoxically, better startups. Thanks for reading! Subscribe for free to receive new posts and support my work. Pledge your support The Numbers at a Glance Where the Money Went 1. AI & Deep Tech (23 % of total funding) Driven by India’s Deep Tech Investment Alliance, eight major funds (Accel, Celesta Capital, IvyCap Ventures and others) committed $ 1 Bn over 10 years toward frontier tech. VCs increasingly view AI infrastructure, robotics, and edge compute as the next SaaS-like wave. Why now: – AI tooling adoption surged 48 % YoY in enterprise pilots. – Government R&D incentives + simpler patent filings = founder confidence. – India’s STEM talent pool offers cost advantage for AI R&D. 2. Fintech & Lending Infra (18 %) Despite RBI’s crackdown on BNPL (Simpl’s shutdown being a wake-up call), fintech remains second-largest. Funding shifted from “velocity” (startups chasing user growth) to “viability” (models built on revenue and compliance). VCs backing lending infra, B2B payments and SME credit rails – sectors directly aligned with India’s DPDP and Open-Finance reforms. Notable bets: Recur Club (alt fintech), Falcon AI (AML automation), and Zikra Payments (cloud KYC rails). 3. Climate & Sustainability (14 %) Investors like Lightrock, Aavishkaar and Blume’s new Climate Fund have anchored India’s emergent climate-tech play. Projects in EV infra, carbon capture, and energy analytics secured >$ 300 Mn this quarter alone. Signal: VCs see policy-tailwinds (Green Credit Program and FAME III) as predictable levers for 5–7-year fund cycles. 4. Consumer & E-commerce (12 %) Once the darling of Indian venture, consumer tech funding fell by 42 %. Still, select brands like Curefoods and Handpickd closed double-digit rounds pre-IPO – signalling that investors prefer profit-first D2C models with short payback periods. Who Led the Quarter: Top Active VCs (Deals by Count Q3 2025) Reading the Pattern: What’s Driving VC Behaviour 1. Quality over Quantity Median round size rose to $ 1.5 M, double last year’s $ 0.68 M. VCs are funding fewer startups but backing them harder with operational support. Post-investment sweat equity is now the norm – portfolio teams sit inside founder Slack channels and even help with talent ops and pricing. 2. Early-Stage is the New Growth Roughly 60 % of all new funds launched in 2025 target seed and Series A. Large check writers like Chiratae and Good Capital are moving downstream while micro-VCs proliferate – 888 VC (₹ 175 Cr fund) and Duro Capital (₹ 200 Cr) among them. 3. Regulation as a Filter Simpl’s RBI ban was a wake-up call: VCs now score “regulatory defensibility” almost as high as market size. DPDP compliance, AI ethics, and data localisation are boardroom themes in Term Sheets. 4. Domestic Capital is Rising Over 45 % of funds deployed this quarter came from India-domiciled LPs – up from 28 % a year ago. Family offices and corporates are filling the gap left by hesitant global LPs, reshaping how India builds its VC stack. Voices on Air from the Ecosystem “This isn’t a funding winter anymore — it’s a reset for capital efficiency.” — Anand Lunia, Partner at India Quotient “Founders are thinking like operators again. Unit economics is cool once more.” — Pooja Sinha, Investor at Blume Ventures “Regulatory resilience is now part of product-market fit.” — Fintech founder, confidential RBI licensee Takeaways for Founders Build for profitability, not valuation. Positive unit economics has become the fastest route to the next round. Treat compliance as strategy, not paperwork. Your data flows and lending models must pass due-diligence filters. Seek VCs who add post-money value. Check for operating partners and portfolio playbooks, not just capital. Ride the macro themes – AI, Climate, Deep Tech. These have government tailwinds and global LP interest. Think longer cycles. The median exit timeline has stretched to 9 years — align your burn rate and patience accordingly. Join Venture Unlocked’s subscriber chat Available in the Substack app and on web Join chat Conclusion: A Market in Metamorphosis India’s VC landscape in 2025 is less about frothy valuations and more about foundational value. Investors are seeking resilience over hype, profit over promises, and discipline over drama. The past quarter proves one thing: when capital gets scarce, clarity gets louder. And for founders who listen — that’s not a winter at all; it’s a wake-up call. Until next week, – Shubham Bopche Host, Venture Unlocked Thanks for reading! Subscribe for free to receive new posts and support my work. Pledge your support Venture Unlocked is free today. But if you enjoyed this post, you can tell Venture Unlocked that their writing is valuable by pledging a future subscription. You won't be charged unless they enable payments. Pledge your support   Like Comment Restack   © 2025 ventureunlocked 548 Market Street PMB 72296, San Francisco, CA 94104 Unsubscribe