Good day. India’s startup scene made a comeback last year, emerging from the slump that followed the 2021 post-Covid spike. By the end of 2024, startups across the country – with key hubs in Bengaluru, Delhi and Mumbai – had raised $13.7 billion over 1,270 funding deals, both solid upticks from the previous year, according to Bain & Company. And things were looking up for 2025.

That was then, this is now. Like many markets around the world, the Trump administration’s on-again, off-again tariffs have thrown India’s economic outlook into disarray. But even as VC dealmaking appears to be sputtering elsewhere, some market-watchers in India see a possible advantage from escalating tariffs on China.

WSJ Pro recently spoke with Hemant Mohapatra, a partner at Lightspeed Venture Partners based in Bengaluru, about why India’s startups have reason to look up. Edited excerpts below.

WSJ Pro: How would U.S. tariffs on China benefit India’s startup sector?

Mohapatra: Every fresh tariff tranche nudges American corporations to de-risk China exposure and hunt for “friend-shored” suppliers. India’s founders are suddenly on more short lists. The reasons are compelling: India is viewed as democratic, IP-secure and scale-ready with a large tech-native, and increasingly AI-native, workforce.
       
WSJ Pro: What kind of startups are most likely to benefit?

Mohapatra: Early signals are that the first lift goes to the AI  and manufacturing sector. Just this week I was at an event organized by the Ananta Centre’s India-U.S. Forum where U.S. Vice President JD Vance spoke. The number of U.S. and Indian diplomats sitting alongside founders in the room made it quite clear that there is a leveling up of collaboration in critical areas such as space, defence, semicon and AI.

WSJ Pro: Wouldn’t India be hit by a broader global slowdown?

Mohapatra: We’re seeing some drag as late-stage mega-rounds and IPO pipelines have slowed in the U.S. Fortunately, India is cushioned by a huge domestic market, and sovereign and Development Finance Initiative programs that keep capital flowing even when Wall Street blinks. In short, volatility trims valuations, not the underlying demand curve. India is also a very heavy services export market, which isn’t under the tariff purview.

WSJ Pro: Tariffs appear to be a moving target. If they’re suddenly lifted, or drastically reduced, what else might boost India’s startups?

Mohapatra: Tariffs are a tailwind, not the engine. Even in a low-tariff world, India’s edge is its digital public-goods stack, talent cost-curve, and policy push and a stable tech-positive government. These are advantages independent of Washington-Beijing sparring. Tariffs have shined a greater spotlight on India—but the engine was already in high gear.

And now on to the news ...

Cybersecurity. Getting a startup on its feet after a cyberattack can cost a fortune. More often than not, investors get stuck with the bill, The Wall Street Journal’s Angus Loten reports.

• Most early-stage ventures simply don’t have the cash to cover damage control after a hack. That can include hefty costs for forensic investigations, customer alerts, regulatory compliance and legal fees that together can run into the hundreds of thousands of dollars, or more.
   
• Because they are backed by deep-pocketed investing firms, startups tend to make lucrative targets for ransomware attacks, said Craig Hoffman, who co-leads the digital risk advisory and cybersecurity team at law firm BakerHostetler.
   
• Of 1,250 cyberattack cases taken on by the firm last year, including companies of all sizes across industries, roughly half were network intrusions, he said. Of these, half were ransomware attacks. The average ransom demand was roughly $2.5 million, with victims paying an average of about $501,000. The cost of attacks on startups handled by the firm were largely borne by companies and their investors, Hoffman said.

Newly independent firm Renown Capital Partners led a $60.3 million growth investment in Utilidata, an Nvidia-backed company that seeks to use artificial intelligence to help utilities deal with an increasingly congested grid, WSJ Pro reports. Chip maker Nvidia, whose graphics processing units provide key hardware for AI system developers, also participated in the Series C investment round, joined by investment firm Keyframe Capital and energy-infrastructure engineering and construction company Quanta Services, according to Utilidata. Utilidata’s Karman modules, which are equipped with Nvidia chips, can be inserted in smart meters and other equipment connected to the power grid. The modules collect data such as voltage and current levels that utilities can use to better balance electricity supply and demand, helping to avoid outages and damage to equipment such as transformers, said Josh Brumberger, Providence, R.I.-based Utilidata’s chief executive.

A group of Wall Street’s biggest banks have finally dug themselves out of a $13 billion quagmire that Elon Musk created, WSJ reports. On Monday, banks sold the final slug of the debt they lent for Musk’s takeover of Twitter in 2022, according to people familiar with the matter. The $1.2 billion of loans sold at 98 cents on the dollar. The sale was a long time coming. In April 2022, Morgan Stanley, Bank of America and five other banks agreed to lend the money to help Musk buy Twitter. The plan was to divvy up some $13 billion in debt, sell it to investors and earn millions in fees. By the time the deal closed, the markets had tanked and investors were wary of betting on Twitter’s debt. 

Funds

FPV Ventures closed its second fund at $525 million, bringing the firm’s assets under management to nearly $1 billion.

Veza, a Los Gatos, Calif.-based identity security startup, landed $108 million in Series D funding led by New Enterprise Associates, bringing the company’s valuation to $808 million.

Endor Labs, a software supply chain security provider, scored $93 million in Series B funding led by DFJ Growth.

Lightrun, a developer observability platform providing real-time debugging and remediation, closed a $70 million Series B round led by Accel and Insight Partners.

Pliant, a Berlin-based corporate card platform, raised $40 million in Series B funding. Illuminate Financial and Speedinvest led the round, which included participation from PayPal Ventures.

Miden, a blockchain technology startup, gathered $25 million in seed funding led by a16z crypto, 1kx and Hack VC.

Cleantech DePoly, a Switzerland-based cleantech startup that transforms plastic waste into raw materials, secured a $23 million seed round led by MassMutual Ventures.

P-1 AI, a San Francisco-based startup building engineering artificial general intelligence for the physical world, was seeded with a $23 million investment led by Radical Ventures.

NetFoundry, a Charlotte, N.C.-based secure networking platform, picked up a $12 million investment led by SYN Ventures.

Cheehoo, a Los Angeles-based AI-powered animation production platform, collected a $10 million investment from Greycroft, Point72 Ventures, Basis Set and others.

TensorStax, a San Francisco-based autonomous AI platform for data engineering, was seeded with a $5 million investment led by Glasswing Ventures.

• IBM to spend $150 billion in U.S. over next five years 
   
• Chinese robotaxi firm Pony AI on faster track to profit after cost cuts, CTO says
   
• China’s Huawei develops new AI chip, seeking to match Nvidia
   
• Meta’s ‘digital companions’ will talk sex with users–even children

• How AI can help supercharge creativity (MIT Technology Review)
   
• Here’s all the Health and Human Services data DOGE has access to (Wired)
   
• Israel’s AI experiments in Gaza war raise ethical concerns (The New York Times)

This newsletter was compiled by Brian Gormley and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley, Angus Loten and Marc Vartabedian.

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