Telangana’s technology ecosystem saw a sharp reset in funding conditions in 2025, according to the Telangana Tech Annual Funding Report released by Tracxn. The data points to a year marked by lower capital deployment, a steep decline in late-stage investments, and a parallel rise in acquisition activity, signalling a shift toward caution and consolidation rather than aggressive expansion.

Total funding raised by tech companies in the state stood at USD 236 million in 2025. This represented a 64 percent decline from the USD 674 million recorded in 2024 and a marginal three percent drop compared to USD 244 million in 2023. The figures place 2025 well below the previous year while remaining close to pre-2024 levels, reflecting a broader pullback in investor risk appetite across the ecosystem.

The most pronounced contraction was seen in late-stage funding. Capital raised at this stage fell to USD 14.8 million in 2025, a 96 percent decline from USD 405 million in 2024 and a 60 percent fall from USD 37.1 million in 2023. There were no funding rounds of USD 100 million or more during the year, underlining the withdrawal from large-scale growth bets and a reset in valuation expectations.

In contrast, early-stage and seed-stage funding showed relative stability. Seed-stage investments amounted to USD 62.1 million in 2025, down 21 percent from 2024 but 14 percent higher than 2023 levels. Early-stage funding reached USD 159 million, declining 17 percent year on year while remaining five percent above 2023. This trend suggests continued backing for early, technically validated ventures under tighter selection criteria.

Sector-wise, enterprise applications, fintech, and environment tech led funding activity in 2025. Enterprise Applications attracted USD 115 million, lower than 2024 but more than double 2023 levels. Fintech companies raised USD 65.2 million, showing moderate growth over 2024 but remaining below 2023. Environment Tech recorded USD 59.7 million, posting strong increases compared to both previous years, driven by a limited number of active deals.

Exit activity showed a notable rise. Telangana-based tech firms completed 12 acquisitions in 2025, compared to five in 2024 and six in 2023. The largest transaction was the acquisition of Reginald Men by Honasa Consumer for USD 21.7 million, followed by Krafton’s purchase of Nautilus Mobile for USD 14 million.

IPO activity remained unchanged, with one company, EPW India, listing publicly, consistent with the previous two years. No new unicorns were created in 2025, continuing a trend seen since 2023. Investor participation was led by pi Ventures, IvyCap Ventures Advisors, and India Accelerator at the seed stage, while Sorin, JAFCO Asia, and Athera were active in early-stage rounds.

Hyderabad-based companies accounted for all funding raised in Telangana for the second consecutive year, highlighting the concentration of investment activity within the state’s capital.

Overall, the 2025 data points to a more disciplined ecosystem, with capital focused on early-stage innovation, limited late-stage risk, and exits increasingly driven by strategic acquisitions rather than public markets. These patterns reflect recalibration as investors adjust expectations amid evolving market conditions nationwide in India.