As IPO Momentum Fades, VCs Embrace Partial Exits and M&A

Why It Matters

The pivot to secondary and M&A exits preserves capital for founders and investors while reducing reliance on a fragile IPO market, reshaping valuation dynamics in the tech ecosystem. It also signals that institutional capital is increasingly comfortable with private‑market liquidity solutions.

Key Takeaways

• VC secondary deals in India hit $1.1 bn across 51 transactions in 2025.
• Startup M&A volume steadied at $6.7 bn with 214 deals in 2025.
• IPO timelines lengthen as mutual funds become selective amid market volatility.
• Founders increasingly use buybacks to provide liquidity without public listing.
• Institutional investors institutionalize secondary markets as alternative exit route.

Pulse Analysis

The recent dip in IPO momentum stems from a confluence of macro‑economic headwinds and heightened risk aversion among institutional investors. Geopolitical tensions in West Asia have amplified market volatility, prompting mutual funds to tighten allocation criteria for new listings. As a result, high‑growth startups are recalibrating their capital‑raising calendars, opting to delay public offerings in favor of more predictable private‑market routes. This shift mirrors a broader trend where capital markets prioritize stability over rapid expansion.

Secondary transactions have emerged as a structured, institutional‑grade liquidity channel. In 2025, India recorded 51 secondary VC deals worth $1.1 billion, a modest increase in deal count despite a slight dip in total value from the prior year. The growth reflects the maturation of secondary platforms, which now offer transparent pricing, regulatory compliance, and faster execution. For investors, these deals provide a way to realize returns without the uncertainty of a public debut, while founders can retain strategic control and avoid the dilution associated with fresh equity raises.

For the startup ecosystem, the diversification of exit pathways reshapes strategic planning. Companies can now sequence liquidity events—starting with partial founder buybacks or secondary sales—to fund growth before a later, potentially more favorable IPO. This staged approach reduces pressure to meet short‑term market expectations and allows firms to build stronger fundamentals. As secondary markets continue to institutionalize, we can expect a more resilient financing landscape where M&A and private‑market exits become the norm rather than the exception.