63% of IPO-ready Indian startups engage global investors despite 96% FDI plunge

The Indian startup ecosystem is navigating a significant shift as net foreign direct investment (FDI) plunged by 96.5% in FY2025, falling from $10.1 billion to just $353 million by May. Despite this dramatic decline, a majority of IPO-ready startups remain actively engaged with global investors, signaling resilience and strategic adaptation.

According to the Greyhound Founder Pulse 2025, 63% of Indian tech startups preparing for IPOs continue to collaborate with global asset managers, underscoring sustained international interest despite the FDI drop.

Sanchit Vir Gogia, CEO and chief analyst at Greyhound Research, explained, "The 96% drop in net FDI isn’t a retreat — it’s a reset. Global capital is not exiting India’s tech ecosystem but reassessing entry points, risk thresholds, and long-term return profiles in light of shifts like AI platformisation and digital sovereignty."

This recalibration reflects broader market dynamics where cautious investor sentiment and economic uncertainties have tempered funding, yet interest in scalable AI applications remains robust. Notably, 71% of founders in India’s Deep Tech sector report a shift in investor expectations from speed to specificity, highlighting a maturing investment landscape focused on sustainable growth.

The data suggests that while foreign direct investment has sharply declined, Indian startups are not isolated from global capital flows. Instead, they are adapting to a new investment paradigm shaped by technological innovation and geopolitical considerations, maintaining strong ties with international investors as they prepare for public offerings.

This evolving scenario points to a nuanced future for India’s tech ecosystem, balancing reduced FDI inflows with strategic global engagement and sector-specific growth opportunities.

Despite a 96% plunge in net foreign direct investment to $353 million in FY2025, 63% of IPO-ready Indian startups continue engaging global investors. Experts say this drop signals a strategic reset, not an exit, as global capital reassesses opportunities amid shifts like AI platformisation and digital sovereignty.