Technology startups are relying more on existing investors for new funding, using bridge financing and unpriced structures to buy time as late-stage private funding becomes more selective and public market investors are closely examining valuations.
Investment from private equity and venture capital, led by current backers of Indian tech companies, grew to $4.05 billion via 183 deals in July 2025-June 2026. This is nearly double the $2.24 billion recorded the previous year, according to Venture Intelligence data shared with Mint.
During the same period, total funding stood at around $18 billion across stages, according to data from Tracxn.
Startups are progressively using insider-led rounds, bridge financings and unpriced structures to extend runway while delaying fresh price discovery, experts told Mint.
Global investment bank Houlihan Lokey, in a report published last month, said growth- and late-stage companies used bridge financings—including Temasek's $24 million investment in Atomberg in December, Coinbase Ventures’ backing of CoinDCX in October, and Accel's $47 million investment in CityMall in September—to extend runway and defer broader valuation resets.
Bankers and investors noted that a more cautious domestic public market is driving this trend.
Companies raising capital at elevated private valuations risk sharp valuation resets when they eventually list, prompting many to favour bridge financings and convertible structures over accepting a lower-priced deal.
"As traditional funding channels become selective and new alternative channels emerge, founders lean on extensions, convertibles and structured bridges to extend runway, sustain momentum and navigate market volatility and valuation corrections," a Houlihan Lokey spokesperson said.
Last month, waste management technology platform Recykal raised a $23 million bridge round comprising a mix of primary and secondary capital led by existing investors.
Round sizes are getting bigger
The average size of insider-led financings has also increased. Venture Intelligence data showed that the average size of Series F and later-stage rounds led by existing investors rose to $114 million during July 2025-June 2026 from $63 million in the corresponding period a year earlier.
Average deal sizes in Series D rounds increased to $23 million from $13 million.
"There’s been a noticeable shift in IPO pricing dynamics over the last 18-24 months. Rupee depreciation, macro headwinds and inflationary pressures have all fed into a broader reset in public markets and specifically how IPOs are priced, and investors have grown more cautious as a result,” said Pranay Jain, managing director, digital, technology and consumer investment banking at Avendus Capital.
Jain said the uncertainty over IPO-time valuations 12-24 months out has made investors cautious, though deal flow remains strong. He noted that muted public markets in 2023-24 still carried expectations of an eventual valuation rebound. However, external shocks combined with stricter public-market pricing have now pushed startups back towards unpriced and convertible deal structures.
Mint had reported in July 2024 that startups were increasingly relying on bridge financings as venture funding dried up and companies sought to stretch cash raised during the funding boom.
As public markets reopened, many late-stage companies shifted their focus towards IPOs. However, heightened scrutiny on valuations has made fresh price discovery more challenging.
“The combination of external shocks and disciplined public market pricing has brought unpriced rounds and convertible structures back into focus,” Jain said.
Cycle has evolved, not repeated
Unlike the funding slowdown of 2023-24, the current environment is not defined by a lack of capital but by greater pricing discipline and macro uncertainty.
Additional macro concerns, such as rupee depreciation, inflationary pressures, fuel prices, and broader geopolitical developments, have added to that caution, Jain added.
"The startups that are raising are commanding bigger rounds than before, and naturally, putting together a bigger round takes more time. So that a startup's growth isn't disrupted while that process plays out, existing investors often step in to support them," said Ankur Mittal, co-founder of Inflection Point Ventures.
"We prefer to structure this as a non-priced convertible rather than setting a valuation at that stage."
Mittal believes insider-led rounds do not necessarily signal stress. "When existing investors back a company again ahead of a priced round, that reflects real confidence from the people who know the business best."
Key takeaways
- Insider-led PE/VC investments in Indian tech companies nearly doubled to $4.05 billion.
- Bridge financings and unpriced rounds help startups delay fresh valuation resets now.
- Series F+ round sizes led by insiders jumped to an average of $ 114 million.
- Public market investors have grown far more disciplined on IPO price valuations.
- Investors say insider-led rounds signal genuine confidence, not distress, among late-stage startups.