Trimmer IPOs and secondaries: How late-stage startups and buyers are braving the uneven markets

The primary three months of 2025 noticed a big surge in late-stage funding in comparison with the identical interval final 12 months. Nevertheless, the following few months might not be as buoyant for late-stage startups, given the assorted developments on the worldwide financial entrance, in line with business consultants.

The cash faucet could not dry out utterly however it’s more likely to decelerate, and smaller cheques may very well be the order of the day. 

Amidst the uneven waters, buyers are exercising warning, prompting IPO-bound startups, together with Ather Power and City Firm, to trim their provide sizes significantly. Some late-stage corporations want to increase funds at a flat valuation, whereas these with sufficient money movement want to attend and watch how issues unfold. 

In the meantime, the investing ecosystem—particularly enterprise capitalists—appears to have discovered a silver lining in secondary funds to dump stakes. 

Ripples within the startup ecosystem

The latest import tariffs levied by US President Donald Trump have triggered a worldwide commerce battle of kinds, resulting in unsure macroeconomic circumstances. They’ve additionally affected investor sentiments within the Indian markets, sparking fears of a commerce slowdown. 

The ripples could be felt within the startup ecosystem too. Based on market watchers and business consultants, buyers are planning to decelerate funding to late-stage corporations, barring extremely scalable and worthwhile startups. 

The market circumstances could also be risky now, however the 12 months started on a powerful notice for late-stage startups—pushed by a slew of VC-backed startups that went public in 2024 and the rising variety of matured startups prepared for the general public markets. 

Within the first three months of 2025, 13 corporations secured funding on the Sequence F stage and above, in comparison with 6 corporations in the identical interval final 12 months. Based on information from Enterprise Intelligence, the overall quantity raised within the Sequence F spherical and above was $918 million for the three months ended March 25—a big rise from $179 million routed to late-stage corporations within the first quarter of 2024. 

Nevertheless, late-stage funding is heading in direction of difficult instances within the coming months.  

“It’s a difficult market at this level of time. There are lots of macro elements at play and it would not be proper to name it a bear market both. Buyers are okay with a sluggish market and perhaps even some adverse sentiment however they don’t like uncertainty. Particularly within the VC market, off late, buyers are okay to attend and watch and spend loads of time constructing conviction,” says Aakash Agrawal, Head of Digital and New Age Enterprise, Anand Rathi Funding Banking.

<determine class="picture embed" contenteditable="false" data-id="571314" data-url=" data-alt="Late stage" data-caption="

Within the first three months of this 12 months, 13 corporations secured funding on the Sequence F and above levels.

” align=”heart”>

Combating stress

Difficult market circumstances and investor issues are forcing many startups to boost late-stage funding at a flat valuation. 

For example, B2B ecommerce agency Udaan raised $75 million in a recent funding spherical from present buyers in February this 12 months at a flat valuation. The corporate, which is reportedly getting ready for an IPO, was valued at $1.8 billion as on January 16, in line with information from Tracxn. 

Used automotive market, Spinny, additionally reportedly raised $131 million at a flat valuation, in line with an Inc42 report.

Firms which might be IPO-bound are caught in a conundrum: ought to they look ahead to the markets to enhance or cut back their concern dimension? Some are selecting the latter. 

Skilled providers platform City Firm has slashed its IPO dimension to Rs 528 crore from a reportedly earlier goal of Rs 3,000 crore, within the face of turbulent markets and rising investor stress. 

EV maker Ather Power plans to boost Rs 2,626 crore, versus its earlier plan of elevating Rs 3,100 crore outlined in its DRHP filed in September final 12 months. 

Trimming the problem dimension may also help the startup obtain optimum pricing on the bourses and appeal to buyers, and forestall anchor buyers and mutual funds from squeezing the startup on pricing, says Norbert Fernandes, Companion at Kenro Capital.

Whereas some mature corporations are headed in direction of itemizing for his or her subsequent part of progress, late-stage corporations with the money movement to maintain themselves for a number of extra months could want to attend and look ahead to now.

“Firm promoters and administration will wish to take a pause and see the place issues are headed. They may wish to wait to see how the market circumstances basically affect their enterprise,” says Shobhit Mathur, Co-founder of wealth administration firm Ionic Wealth.

In the meantime, the investing ecosystem is popping to secondary funds to navigate the present interval. Secondary funds are funding automobiles that buy present stakes or property from non-public fairness fund buyers.

For VCs struggling for exits amidst the market uncertainty, secondaries have gotten a horny choice to liquidate their holdings.  

“The extra nervousness there may be across the IPO market, the extra potential sellers who’re coming ahead and having pragmatic conversations round secondaries,” notes Fernandes.

Whereas big-ticket transactions proceed to occur within the general startup ecosystem, the constituents of this capital are seeing a shift. There’s a smaller proportion of major capital and a bigger share of secondary capital, in line with Fernandes. 

What this implies is that the quantity of latest cash coming into an organization, usually in alternate for newly issued shares, has gone down, indicating that corporations being constructed in the present day want decrease quantities of capital to fund their progress. 

@media (max-width: 769px) {
.thumbnailWrapper{
width:6.62rem !vital;
}
.alsoReadTitleImage{
min-width: 81px !vital;
min-height: 81px !vital;
}

.alsoReadMainTitleText{
font-size: 14px !vital;
line-height: 20px !vital;
}

.alsoReadHeadText{
font-size: 24px !vital;
line-height: 20px !vital;
}
}

Additionally Learn

From spray-and-pray to precision: VCs shift gears in deeptech playbook

VCs will proceed to chop smaller cheques

It’s no secret that VC corporations have scaled again on writing massive cheques to corporations throughout all funding levels—a marked shift from 2022, which noticed ballooning valuations and lofty cheques. 

As talked about earlier, the overall quantity raised in Sequence F stage and above was $918 million within the first three months of 2025. In 2022, this was $2.61 billion. 

Because of the funding increase of 2022, a lot of startups are of their late levels now. Whereas VCs have a much bigger pool of startups to select from, as they search to diversify their funding bets, cheque sizes will proceed to be smaller, and worth rationalisation might be key going ahead.

“Late stage VC buyers who would earlier deploy wherever from $100 million to $300 million in maturing startups are extra comfy taking $50 million to $100 million bets and as a substitute search for corporations which might be extra capital environment friendly,” says Agrawal of Anand Rathi Funding Banking.

Concentrate on high quality and profitability

Late-stage startups are sometimes benchmarked in opposition to public corporations as they line as much as listing on public bourses. This comes with better investor scrutiny over efficiency, deeper due diligence, and concentrate on burn charge and high quality.  

Buyers are more and more backing late-stage startups which have constructed a powerful enterprise mannequin, rising above all of the noise and litter, and have neared profitability or have clear profitability targets for the near-term.

“It’s going to be very robust for corporations which might be considerably EBITDA loss-making or with low readability on how they’ll transfer into the inexperienced. In case you are that type of firm, the possibilities of going public are fairly low proper now, and sure so for the following 6-12 months,” says Fernandes of Kenro Capital.