While the startup funding ecosystem is showing signs of recovery after a prolonged slowdown, the appetite for angel investing seems to have diminished significantly, pointing to a shift in early-stage capital dynamics.
According to Kushal Bhagia, co-founder of early-stage VC firm All In Capital, many angel investors planned poorly. “They deployed their entire angel investment corpus in two years, not realising that exits take four to five years,” Bhagia pointed out.
With a lot of capital locked up in illiquid investments, many angels have pulled back or paused funding activity.
“Money is available but investors now demand proof of growth, frugality, and a path to profitability,” said Brijesh Damodaran, founding partner at Auxano Capital.
Data from Tracxn shows that of the top 200 funding rounds since 2019, that included at least one angel investor, only eight have been completed so far in 2025.
This is a sharp drop from 28 in 2024 and 26 in 2023, and less than a fifth of the 46 rounds seen in 2022.
While over 3,400 funding rounds since 2019 have witnessed participation from angel investors, the momentum has clearly slowed in recent years.
Angel investors, who are typically high-net-worth individuals or founders of technology firms, often contribute personal funds to fledgling startups in lieu of equity. Unlike institutional venture capitalists, angels tend to take a more hands-on mentorship approach with their portfolio companies. During the boom years of 2021 and 2022, a wave of liquidity, largely from IPO windfalls and secondary exits, enabled tech founders and HNIs to pour money into early-stage ventures.
The slowing participation has also been compounded by a change in the investment landscape. Venture capital firms, especially smaller micro VCs managing sub-$100 million funds, are moving earlier into startup cap tables, often backing idea-stage companies with modest cheque sizes. This has made high-quality deals more competitive and less accessible for angels. “Even the established angel networks rarely appear in high-quality deals anymore,” one investor noted.
Adding to the slowdown is the scarcity of substantial liquidity events such as IPOs or large secondary sales since 2022. Without exits to recycle capital, many successful founders who once led the charge in angel investing have shifted their focus or stepped back entirely. At the same time, non-tech HNIs have also found limited access to promising deals and are showing increased caution after some high-profile failures from the 2021 funding frenzy.
Bhagia believes this correction could ultimately restore angel investing to its original ethos, backing visionary founders based on conviction rather than treating startup equity as just another asset class.
