Will a flat funding scenario in start-ups impact hirings in 2025?

A funding winter could be back for Indian startups — trends from the first three months of the year indicate. As per YS Research, Venture Capital (VC) in Indian startups remained flat for the first three months of Q1 of Calendar Year 2025, as larger value deals declined during the period. Indian startups raised a total of $ 2.52 billion in VC funding in Q1 2025 across 312 deals, compared with $2.53 billion in the same period last year, with 310 deals.

On a quarterly basis, funding declined 17.2 per cent compared to Q4 2024 (October to December), where startups bagged $3 billion across 269 deals. As per the report Bengaluru, bagged the highest VC funding amount at $1.1 billion, followed by Mumbai at $519 million and the Delhi-NCR region at $446 million. Given flattish funding will it impact hiring plans by Indian start-ups?

Experts point out that focus on profitability amid an extended funding winter has impacted the hiring scenarios drastically in start-up ecosystem. Though startups will be cautious when it comes to hiring the situation is not as severe as it was during the pandemic or immediately post-pandemic. There have not been mass layoffs and though hiring has slowed down need-based hiring is happening in startups across sectors.

“The flip side of the problem is a clear reduction in hiring trends of start-ups, the reduction being around 10 per cent of the projected strength with reduced wage costs and the hovering uncertainty of what AI is on its potential impact on software jobs. Having said that the situation needs to be watched over the next two quarters on how investments in start-ups scales up to provide better clarity,” remarked Subramanyam S, founder and CEO of AscentHR.

In 2024 the funding scenario had started looking up for startups and green shoots were showing in India. Sectors such as e-commerce, fintech and logistics are expected to hire among the start-ups.

It is expected that there could be a favourable growth in the hiring outlook for start-ups during the later part of 2025, especially after the uncertainties around world trade are back to normalcy.

“While funding levels have remained stable over the past four quarters rather than increasing, companies are proceeding with their planned hiring strategies. Although a sharp rise in hiring isn’t anticipated, the scenario has changed from layoffs to an uptick in hiring. Some of the late-stage startups have already witnessed increased recruitment, a trend likely to continue, whereas growth-stage startups may face challenges due to limited funding in 2025,” remarked Aditya Narayan Mishra, CEO and MD of CIEL HR.