Dec 22, 2024
Surprisingly Predicting 2025
B2B
B2C
Venture Capital
Retail
Finance
IPO
It has been a crazy year.
The decade of the 2020s started with a once-in-a-generation event. Wars followed a new one each year to date. Seventy countries had elections in 2024. The world voted for change, and chaos.
The world washed down its crypto hangover with AI’s unlimited mania. As the year came to an end, crypto made a comeback. Indian equity markets appeared to have a relentless bull run, only to be walloped as the year ended. Quick commerce seems unstoppable.
On our front, this year couldn’t have been more different than the past. We are entering a golden era of Indian tech. The AJVC platform has taken a new life. It is all so wonderful. It feels like three years since we made our 2024 prediction.
We begin with a self-rating with our marking system, like a doctor diagnosing herself.
2024 Year in Review
#1 At least 3 new VC funds will start with $10M+ fund size, while larger funds will downscale This was a prescient and crazy prediction that ended up being right. Including yours truly, more than 5 VC funds with 80 Cr of AUM started in this year. 10+ new funds were launched overall. Emerging fund managers are appearing at rapid pace. Large funds are downscaling, both as teams and returning capital to their LPs. (10/10)
#2 OpenSource AI startups will break out from India, helping AI raise $300M+ and making it the fastest growing VC segment: Early this year, Sarvam AI raised $45M to launch its open source foundational model. Krutrim raised another $50M for its own model, taking opensource up to $100M. Generative AI alone raised $200M, growing 6x from last year. It easily was the hottest sector this year, with only growing momentum (10/10)
#3 Bharat startups will breakout to scale, with at least one being valued >$500M PocketFM became close to a unicorn, AstroTalk was valued at $300M, SriMandir was valued at north of $100M after raising $18M. VC funds made Bharat a focus plank. People have now started to believe that money can be made with micro-transactions from Indians (10/10)
#4 5+ Consumer Brands will cross $100m in annual revenue with positive CM3 BlueStone, Wakefit, Atomberg, Country Delight, GoColors crossed $100M for the first time. Not only were they growing fast, they are all profitable or close to profitable, indicating being CM3 positive. 2024 was a watershed year for the segment as customers shifted from FMCG to explore new brands (10/10)
#5 >50% of tech unicorns that IPO will be profitable: A record 10 IPOs happened this year in the form of Go Digit General Insurance, Awfis, Ixigo, Ola Electric, FirstCry, TBO Tek, Ixigo, MobiKwik, Unicommerce and the blockbuster Swiggy. Of the 10, 3 are unprofitable, Ola, FirstCry and Swiggy. 70% are profitable and continue to get better. Discipline is coming to India’s tech companies (10/10)
#6 Semiconductor startups will raise >$50M to scale: Semiconductor startups have quietly raised $40M of funding across 20 companies. While NVIDIA continues to the be darling of the tech world, India is starting to pick up. Startups like InCore raised $3M. A lot of small companies sprouted. The next five years for the industry will be interesting. (9/10)
We scored an astonishing 9.8/10, our highest ever. With that pat on the back, we are jumping in
2025 Predictions
Quick Commerce will see consolidation, pain due to big player competition, and funding peaking mid-year
2024 was the year when Quick Commerce became the buzziest buzzword defying funding winter and shocking its ardent critics.
Zepto became one of the fastest companies to grow to $1b in GMV. As you punched in orders on the app that got delivered in <10 minutes, investors quarrelled up to punch an entry on their cap table. It raised an astounding $1.35b in 2024 with plans to IPO by 2025.
The stupendous rise of Blinkit led to a gold rush and started a ‘Quick Commerce for X’ funding wave. Need apparel, get it in 10 minutes, need medicines, no more than 10 minutes, hungry? Don't fret, food is coming in 10 minutes, need a pandit for your wedding, he is coming in 10 minutes.
The wave to find new and newer categories that are quick commerce amenable birthed startups such as Swish (food delivery), FirstClub (fresh food, bakery, dairy, nutrition), Slikk, Blip Fashion (fashion), Dava Ninja (medicine). We expect many more to come in 2025
It has forced e-commerce giants to enter into quick-commerce and defend their market share. Be it D2C brands or large established FMCG companies, it has given them an entirely new distribution channel for which they have had to adapt their commercials, SKU size and variety quickly. Being a category manager in a Q-commerce has become the hottest job in town and the envy of CMs in other industries.
You are almost reminded of the Food Tech wave of 2015-16 when 100+ startups get funded quickly and died quicker, with only Swiggy surviving and thriving from that cohort.
We expect 2025 to repeat that phase where “Food Tech” is replaced with “Quick Commerce”, but the movie plays roughly the same.
The top 15-20 cities will see intense competition as Flipkart Minutes, Amazon Tez, BBNow compete with Instamart, Blinkit, and Zepto. They will compete for the best locations for dark stores and access to gig workers as speed, convenience and SKU choices become commoditised. In all this, consumers will have the last laugh and be spoilt for choices.
Eventually, though, the economics will struggle to work. Prices are already starting to pinch as customers complain about paying much higher prices in q-commerce.
This euphoria will start hitting the top-tier India TAM boundaries beyond the top 15-20 cities. Consumers beyond these cities might initially have a fad with Q-commerce. Still, it will dissipate as they have the luxury of time, like to shop at their nearest kirana and have built decades of trust and service quality with them, which will be hard to replace. Further, they might not be willing to pay Rs. 20-50 per delivery or platform fee. Lack of order density and throughput per dark store will further mean that the unit economics might fail in these markets.
As the 10-minute optimism hits the Bharat reality, the initial funding frenzy in H1 '25 to find and fund the next ‘Blinkit for X’ will see a quicker and more painful death of many of these startups by H2’25. But in a way, a lot of the hidden societal costs and economic challenges of the quick commerce frenzy will be averted as it happens
Time to go long on DMart and Vishal Mega Mart?
Vertical-focused AI will see 4,000 Cr + of funding, with 100+ startups disrupting the SaaS model
2025 will be the year when the AI toddler grows up to be a responsible kid. India will not be behind, especially on use cases
Much of the last two years post the ChatGPT launch went into funding and building the foundational layers, building LLMs, getting the inference and compute chips assembled or the hardware infrastructure developed
Can India’s 30-Year-Old IT Backbone Build a Global AI Powerhouse?
Much of the goodness from this period will be used to innovate on the consumer application and AI agent side. Co-pilot agents will rapidly move towards mainstream adoption, pushed by high investment by Big Tech to defend their territories and offer greater value to their client base.
Microsoft 365 Co-Pilot is being used by almost 70% of Fortune 500 companies already! Accenture has rolled out co-pilots to 100k+ employees, and 70% of users in Bank of Queensland are saving 2.5-5 hours per week. There are countless examples and efficiency gains, and the list will expand quickly in 2025.
The year will see every knowledge worker get a personal AI assistant where repetitive tasks such as email drafting, follow-ups, meeting scheduling, campaign design, and lead prioritization will get AI-automated and allow employees to focus on strategic tasks with high creativity and intellectual curiosity or serve as final QA/ review checks
Co-pilots will address complex sectors such as pharmaceuticals, healthcare, legal and enable Services as a Software trend to pick up. For example, AI agents will be used in insurance for claim processing, premium pricing forecasts, and underwriting support; in education for admission & course recommendation; in retail for personalised shopping and inventory mgmt., and HR for performance review feedback and audit agents.
Interesting companies started by repeat founders such as Ema, Nurix have already been funded. We will see more of these funded vertical-wise such as Jhana, Rapidclaims, IPAuthor, Hyperbots, Mili and Intellimatiom
Looking back, this is the most seminal shift in workforce productivity and how we reimagine wor,k leading to Knowledge Revolution 2.0. AI agents will come as a force multiplier in areas where the need is most acute and unsexy industries where the use case of the opportunity is yet undiscovered. Areas where labor shortage is acute, the nature of repetitive work high or the RoI so glaringly visible will see rapid PMF
India has always moved forward on software’s new waves, and this is the latest version
We expect to see and be amazed by many Agentic AI uniquely innovating for the Indian context and nuances in 2025!
Fintech will not be in India’s top 3 most funded sectors in 2025
In 2023, fintech was the show's star, commanding 28% of all startup funding in India—a staggering $3.5B. It felt like the sector could do no wrong—every pitch deck was golden, and every deal was a cause for celebration.
Fast forward to 2024, and the glitter is starting to fade. Fintech’s share of the funding pie has slipped to 20%, bringing in $2.8B, and deal activity has plummeted by 20%, dragging us back to levels last seen in 2016. Fintech exits 2024 at 2nd spot, between retail and enterprise applications.
Fintech’s verticals are struggling. Funding in payments tech fell by a jaw-dropping 60%. It turns out that endlessly burning cash on user acquisition isn’t sustainable. Investors have finally woken up to the harsh reality that most users churn and leave little more than a trail of cashback crumbs.
Startups are being forced to ask hard questions: What’s the value of a user over time? Can we turn a profit? Without clear answers, payment startups are struggling to justify their valuations. The days of freebies and “growth at any cost” are officially over.
While payment tech faced a sharp decline, investment tech found its footing, growing funding by 60% year-on-year to reach $600M in 2024. Platforms focusing on digital gold, bonds, and alternative assets saw surging user interest.
For example, 65% of millennials now favor digital gold over physical gold—a significant preference shift. A similar trend could unfold in bond investments by 2025. Currently, retail participation in bonds stands at approximately 4%, but it has the potential to grow to 7-8% and eventually reach 10% by 2026.
Investment tech’s ability to demonstrate profitability or contribution margin positivity has been a key driver of its growth, attracting cautious but eager investors.
A lot of the declining interest and focus on building a business is the regulator. The RBI is taking a no-nonsense approach. In 2024, peer-to-peer (P2P) lending became the latest casualty of its stringent stance, with strict regulations severely impacting many players in the sector.
By August 2024, the industry’s assets under management (AUM) had plummeted to ₹6,500 crore—a sharp 35% drop from the earlier estimate of ₹10,000 crore.
This decline is expected to deepen, with another 40% drop anticipated in 2025. Moreover, the central bank is set on unsecured lending, putting fintechs in this space on notice.
This is a secular trend.
Fintech's share of total startup funding will drop to around 15% in 2025. Fintech may fall out of India’s top three most-funded sectors for the first time in nearly a decade.
Investors aren’t throwing money at “future potential” anymore—they want hard numbers. Every user needs to be profitable, and every acquisition strategy needs to make sense. Established players like Razorpay, PhonePe, and Cred will likely acquire smaller startups to expand product offerings and leverage India’s digital public infrastructure.
Everyone will go back to lending, as every fintech lives and dies by it.
The buzzword at GFF 2024 was “credit.” Between the credit line on UPI rollout and the maturing OCEN framework, 2025 will be when fintech attempts to reinvent itself through lending innovation.
10+ startups will IPO in 2025 with 50% being profitable, despite Indian markets correcting and the economy slowing
If one storyline dominated 2024, it was the spectacular rise of startup IPOs. A record-breaking 10 startups made their way to Dalal Street, raising billions and showcasing India as a global innovation powerhouse.
This wasn’t just a stroke of luck; it resulted from India’s resilient economy, favorable regulatory changes, and a unique window of opportunity as global IPO activity slowed. While the US, China, and Europe hit the pause button, India pressed play—and how.
The numbers speak for themselves.
Venture capital funds reaped over $4 billion in returns through IPOs and public market exits in 2024, doubling their 2023 haul and more than 2.5 times that of 2022. Swiggy’s $1.35 billion IPO wasn’t just India’s highlight; it was one of the biggest global tech listings, capturing international investor attention and setting the tone for what’s next.
India’s equity markets are correcting, falling 10% in the last quarter. The gloomy market is not a really nice place to go public.
Yet in 2025, India is primed for another IPO wave. 20+ have staked claims to go public, though we think 10+ will eventually go public. We expect over 5 of these to be EBITDA profitable—a stark contrast to the “growth at all costs” narrative that once defined Indian startups.
It’s partly a survival strategy. Investors today demand more than just user growth; they want solid unit economics and a clear path to sustainable returns. Many startups have responded by tightening operations, diversifying revenue streams, and shedding unprofitable verticals.
Meesho, for instance, has doubled down on monetisation through advertising while keeping its cost structure lean. Companies like Zetwerk and Urban Company have built inherently profitable business models, focusing on enterprise and premium customer segments. These shifts are paying off, giving startups the financial metrics needed to win over public market investors.
But the story isn’t just about individual companies but the ecosystem. India’s vibrant capital markets, robust retail participation, and growing appetite for tech-led innovation are setting the stage for blockbuster listings.
Of course, the road to IPO glory isn’t without hurdles. Macroeconomic conditions, geopolitical uncertainties, and valuation expectations could still play spoilsport. Yet, the groundwork laid in 2024 suggests a more mature, focused, and financially disciplined crop of startups entering 2025.
Jewelry startups will raise more than 2,000 Cr in funding, 5 new startups will debut with funding
Just $15M (100 Cr) —all the jewellery and lab-grown diamond segment attracted in funding back in 2020. Fast forward to 2024, and the sector has seen a staggering 10x jump, pulling in $150M (1,200 Cr) in investments.
The shift isn’t accidental.
Consumers are driving this change with their growing appetite for sustainability, affordability, and transparency. Lab-grown diamonds, which are nearly indistinguishable from their mined counterparts, are 20-30% cheaper and carry the added allure of being ethically sourced. This makes them particularly appealing to Millennials and Gen Z, who increasingly prioritise values over legacy.
Venture capitalists are taking note, pouring early-stage funding into startups that promise scalability and fast profitability while legacy players scramble to integrate lab-grown options into their offerings.
What’s driving this surge?
First, the sector had a blockbuster exit. CaratLane was acquired for more than 25,000 Cr, generating one of India’s biggest winners in practically any category. Founders and investors have begun to accept the sector as one of serious interest.
Second, consumer behaviour is shifting toward buying jewelry online, driven by D2C brands like Giva and Melorra, which have turned traditional jewelry shopping into a tech-driven, convenient experience.
Finally, the sector has seen increased global acceptance, with countries like the US and China emerging as major markets for lab-grown products, adding another layer of growth potential.
Some of the biggest names are already making waves.
Bluestone, a leader in combining online sales with physical stores, saw over 60% revenue surge in 2024 and is gearing up for an IPO in 2025. Valued around $1.5 billion, Bluestone’s public debut could redefine what’s possible for jewelry-tech startups. This itself could end up raising a massive number for jewelerry startups.
2025 will likely see the sector getting more competitive and scaling further. At least 10 startups are expected to secure new funding rounds, with total investments in the space projected to exceed $200 million. With lab-grown diamonds leading the charge, 2025 could be the year this segment cements its place as a cornerstone of India’s startup ecosystem. The sparkle is real, and it’s only getting brighter.
Manufacturing tech will see 1 IPO, 2,000 Cr of funding
2021 was a breakout year for manufacturing tech in India, with startups attracting over $700M (5,600 Cr) in funding, riding a wave of optimism around industrial innovation. But the momentum fizzled out, and funding levels shrank to about $200M (1,600 Cr) annually in the following years. 2024 was no different, as the sector stayed steady but largely uninspiring.
2025, however, could mark a turning point. With manufacturing tech poised for a potential revival, the sector might finally break out of its plateau. What’s driving this renewed interest?
First, the government’s Production Linked Incentive (PLI) schemes and a continued push for Make in India have created a fertile ground for innovation. Startups like Zetwerk, which connects manufacturers with industrial buyers through its tech-enabled platform, are thriving. Zetwerk saw its revenue soar to over ₹12,000 crore with 25% year-over-year revenue growth in 2024, expanding its global footprint and attracting investors’ attention as it scales its enterprise offerings.
Second, the increasing emphasis on efficiency and resilience in global supply chains makes manufacturing tech indispensable.
Startups such as Haber, which uses AI to optimize industrial water consumption, and Infinite Uptime, specialising in predictive maintenance, are addressing critical pain points for manufacturers. Meanwhile, Intangles and Uptime are leveraging real-time analytics and IoT to minimize equipment downtime and enhance productivity, making their solutions attractive to legacy manufacturers and new-age businesses.
Established players like Bijnis are also transforming smaller-scale manufacturing sectors. By digitizing the supply chains for traditional industries like textiles and footwear, Bijnis has opened up new opportunities for MSMEs, making them part of the tech-driven revolution. These businesses are tapping into platforms like Bijnis to access markets more efficiently and at a lower cost, further fueling the manufacturing tech ecosystem.
We expect funding in manufacturing tech will likely exceed 2,000 Cr in 2025, with early-stage rounds picking up again as VCs look to identify the next big players. The gears are turning, and manufacturing tech is ready to roar back to life.