Defence startup funding doubles to record $247 million in 2025: Tracxn

Report says investors favour tech used in both civilian and military sectors over slower combat projects

India’s defence technology sector attracted $247 million in funding in 2025 — its highest annual inflow to date and nearly double the $125 million raised in 2024 — driven largely by a funding round of over $100 million secured by drone manufacturer Raphe mPhibr, according to a report released by data intelligence platform Tracxn on Wednesday.

 

The increase came despite a decline in the number of funding rounds in 2025, which fell to 30 from 42 in 2024, the report said. It noted that the near doubling of total capital raised was largely driven by Raphe mPhibr’s Series B round. The report also highlighted that annual funding activity had risen steadily from five rounds in 2016 to a peak of 42 in 2024, before moderating in 2025.

   

Starting in 2016, the defence tech sector has attracted a total of $711 million in equity funding to date, the report noted. Of this, seed-stage companies raised about $118 million across 174 rounds, early-stage firms secured $527 million across 56 rounds, while late-stage funding stood at $66 million across just five rounds.

 

Notably, non-combat systems attracted $551 million, or 77.5 per cent of total funding, followed by combat weapon systems at $106 million (14.9 per cent), defence support and enablement systems at $27 million (3.8 per cent), and training and simulation solutions at $27 million (3.8 per cent). The report noted that non-combat systems accounting for the majority of investment inflows underscored “investor preference for dual-use, procurement-visible infrastructure layers over long-gestation combat platforms”.

 

Bengaluru emerged as the most funded city, raising $216 million across 61 rounds, followed by Noida with $168 million across 19 rounds, and Chennai with $88 million across 26 rounds. Together, they accounted for over 66 per cent of total funding in the ecosystem.

 

Around 116 venture capital firms have participated in India’s defence tech funding to date.