Angel investing in Indian startups saw a notable decline in 2025, indicating a reset for the country’s early-stage funding scene. Changes in regulations affected how investors could participate and comply, leading to a sharp drop in the number of angel-funded deals, even
though investments were still being made, but in a more focused way. This new framework has changed the way early investments are made and who can take part, which has a direct effect on how young startups raise funds.
The regulatory changes brought in stricter rules, limiting angel fund participation to accredited investors, and introduced higher financial requirements along with more compliance and reporting obligations. While these steps aimed to enhance investor protection and market transparency, many investors felt that the increased complexity has led to reduced participation and slower deal-making in the early-stage sector.
In line with these changes, the number of angel investment rounds fell by 44 percent in 2025, dropping to 834 deals from 1,495 in 2024, according to data from Tracxn. The total capital invested also decreased, but at a slower rate.
Overall funding dropped by about 28 percent, from $5.35 billion in 2024 to around $3.85 billion in 2025. The sharper decline in the number of deals compared to the capital deployed indicates a trend towards consolidation, where fewer investors are participating but with larger investments. This suggests a shrinking investor base rather than a total exit of capital from the ecosystem.
Industry experts noted that recent SEBI regulations have unintentionally pushed away many traditional angel investors. Ujwal Sutaria, Founder and General Partner at TDV Partners, stated that the new rules have limited the involvement of experienced operators, founders, and senior professionals who have historically supported startups at their early stages. He also mentioned that reduced incentives at the syndication level, such as higher taxes on sourcing fees and restrictions on profit sharing, have further discouraged active deal-making.
Angel investment platforms are worried that the impact goes beyond just funding amounts; it also affects the early-stage validation of startups. Ankur Mittal, Co-founder of Inflection Point Ventures (IPV), noted that many companies now getting ready for IPOs gained their first significant institutional confidence through angel investments.
While acknowledging the need for investor protection, industry leaders warned that overly strict rules could exclude many potential contributors. This exclusion could limit not just the availability of capital but also the strategic advice, industry connections, and hands-on support that angel investors usually offer to early-stage founders.
Despite the overall slowdown, IPV remained the most active angel platform in India in 2025, completing 46 investments during the year, according to Tracxn data.
Not everyone sees the decline as a negative development. Anirudh A. Damani, Managing Partner at Artha Venture Fund, described the change as a necessary cleanup. He pointed out that some previous angel activities resembled retail crowdfunding rather than real venture investing, with very small investments complicating ownership structures without adding real value.
Damani believes that the removal of such participants has made fundraising more efficient and improved deal quality. He also noted that founders who approach institutional investors today are more disciplined, focusing more on unit economics, efficient use of capital, and sustainable growth. However, he warned that there could be risks if compliance costs become too high for seed-stage funds.
Overall, the data from 2025 shows that India’s angel investing landscape has become smaller, slower, and more concentrated. While capital is still available, access has become more limited, especially for pre-seed and seed-stage founders.
Whether this regulatory reset results in a healthier and more disciplined ecosystem or creates long-term gaps at the base of the funding funnel will depend on how participation models and incentive structures change. For now, the trend indicates a clear shift in how early-stage capital is being utilized in India’s startup ecosystem.