Indian Startups Secure $5B in FY25: Are Public Markets the Future of Venture Capital?

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In a year marked by economic challenges, India’s startup scene found a silver lining: the public markets. According to the Rainmaker Group’s RainGauge Index, startups raised over ₹44,000 crore (around $5.3 billion) through IPOs and other offerings. This shift shows that many Indian startups are opting for the public route instead of relying solely on venture capital, signaling a growing maturity in this sector.

The IPO Landscape

The journey of Indian startups has evolved. After the IPO rush of 2021-22 and a subsequent reality check in 2023, FY25 emerged as a year of solid performances based on fundamentals. “FY25 didn’t just test India’s startup listings, it matured them,” said Kashyap Chanchani, Managing Partner at The Rainmaker Group. He emphasizes that investors are now focusing more on the substance and sustainability of businesses rather than just flashy stories.

Exits and New Beginnings

FY25 also recorded a notable ₹20,000 crore in secondary exits, where major players like Peak XV Partners and TPG made strategic moves to capitalize on market interest. Meanwhile, mutual fund investments in listed startups grew significantly. Holdings in RainGauge Index companies rose from 10% in March 2024 to 14% by March 2025, indicating rising institutional confidence.

Noteworthy Market Players

Several prominent startups achieved remarkable milestones:

Zomato joined India’s major market indices, the NIFTY50 and SENSEX.
Swiggy made its debut in the NIFTY Next 50 even before a formal IPO.
Other names like Nykaa and Ola Electric entered the NIFTY MidCap150.

These entries aren’t just there for show; they attract serious investor interest and enhance trading activity.

The FII Rollercoaster

At the start of FY25, foreign institutional investors (FIIs) faced challenges, withdrawing ₹78,000 crore in Q1 due to global economic uncertainty. However, by Q4, many returned as expectations for rate cuts grew. This shift reveals renewed faith in India’s economic stability and its tech-driven future.

A Closer Look at Startups

The RainGauge report highlights four distinct types of listed startups:

Profitability Leaders: Companies like Policybazaar and CarTrade show consistent growth and profitability.
Margin Pressure Players: Zomato and Delhivery are evolving, focusing on recovering margins while growing.
Profit-Driven: Some firms are prioritizing profits even if it means slowing top-line growth.
High-Burn Strugglers: Ventures in quick commerce or electric vehicles are still facing intense scrutiny.

Understanding these categories helps investors determine which companies are genuinely maturing and which are still navigating their paths.

Moving Forward

FY25 highlighted the shift from hype to substance in the startup world. Startups now face important decisions about financial health, proving they’re more than just good ideas. The IPO is no longer a finish line but a starting point for a committed relationship with investors. If this year is any indication, India’s startups are on a promising path toward growth and sustainability.

For a more comprehensive understanding of this topic, check out this Rainmaker Group report. The landscape is shifting, and staying informed is key.

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