The number of start-ups in India is expected to rise by over 2.6 times in the next six years to reach 1.8 lakh. Cumulative funding in the sector since 2014 is projected to top $170 billion by the end of 2025, fuelled by a rise in the internet and digital economy, according to a report.

The cumulative capital raised by Indian start-ups from 2014 to the first half of 2024 is $151 billion, and by the end of this year, that amount is expected to reach $156 billion, according to data from Inc42, which tracks the start-up sector extensively.

Despite the slowdown in funding, especially in the seed and early stages, start-up activity in the country remains robust, as promoters are either bootstrapping or finding alternative means, such as crowdfunding, to launch their ventures.

The number of tech start-ups is forecast to rise to 1.2 lakh by the end of 2025, up from 70,000 this year.

The rising penetration of internet and smartphone users is driving the tech start-up boom. The number of internet users is expected to rise to over 900 million by the end of next year, up from over 820 million in 2023, while the number of smartphone users is estimated to exceed 1.1 billion, reflecting a growth of 10 per cent.

Over the last 10 years, the number of deals in the start-up space has risen to 10,500 in the first half of 2024 from 376 in 2014, with most of the growth occurring during the years 2020 and 2022. There was also a significant increase in funding during those two years. While $50 billion was raised in the first five years, the next five years saw $100 billion being raised by start-ups, as India became one of the hottest investment destinations for venture funds and private equity firms.

There has been signs of renewed activity in the start-up ecosystem, with a 16 per cent rise in the number of deals in the first half of 2024 compared to the second half of 2023, and a 20 per cent rise in the funding amount in the same period.

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