Tech funding in India falls 18% to $11.7 billion in FY26; early-stage investments buck trend: Tracxn

India’s technology startup ecosystem saw a moderation in funding activity in FY25-26, with total capital raised falling 18% year-on-year to $11.7 billion from $14.3 billion in FY24-25, according to Tracxn’s India Tech Annual Funding Report 2026. 

Despite the decline, funding was up 20% compared to $9.7 billion raised in FY23-24, underscoring a gradual recovery in investor sentiment. India ranked as the fourth-highest funded country globally during the year, behind the U.S., the UK, and China while staying ahead of Germany and France. 

Early-stage funding shines amid overall slump 

Funding trends remained mixed across stages. Seed-stage investments fell 15% to $1.3 billion, compared to $1.5 billion in both FY24-25 and FY23-24. In contrast, early-stage funding surged 33% year-on-year to $4.8 billion, up from $3.6 billion in FY24-25 and $3.5 billion in FY23-24, signalling sustained investor appetite for emerging startups. 

Late-stage funding, however, fell sharply by 38% to $5.6 billion from $9.2 billion a year ago, though it remained 18% higher than $4.7 billion raised in FY23-24. 

Neha Singh, Co-Founder of Tracxn, said the divergence reflects evolving investor priorities. “While overall funding saw moderation, strong momentum in early-stage investments highlights continued investor confidence in startups building differentiated and scalable solutions,” she said. 

She added that sectors such as enterprise applications, fintech and retail continue to benefit from technology-led transformation, while rising IPO activity and unicorn creation point to improving ecosystem maturity and stronger fundamentals. 

Key sectors lead funding 

The number of $100 million-plus funding rounds declined to 13 in FY25-26 from 23 in FY24-25, though it remained unchanged from FY23-24. 

Large deals were concentrated in enterprise infrastructure, enterprise applications and fintech. Notable transactions included Nxtra’s $710 million private equity round, Neysa’s $600 million Series B funding and Inox Clean Energy’s $344 million Series D raise. 

Fintech top sectors 

Enterprise applications, fintech and retail emerged as the top-funded sectors during the year. 

India’s tech ecosystem recorded 129 acquisitions in FY25-26, down 15% from 151 deals in FY24-25 and marginally lower than 132 acquisitions in FY23-24. Among the largest deals, Resulticks was acquired by Diginex for $2 billion, while Brahma was acquired by Polymarket for $1.2 billion. 

IPO activity surges 

IPO activity saw a sharp uptick, with 47 public listings in FY25-26, a 52% increase from 31 IPOs in FY24-25 and 32 in FY23-24. Major listings included Lenskart, Groww, and Meesho. 

The ecosystem also added six new unicorns during the year, up from four in each of the previous two financial years. 

On a city-wise basis, Bengaluru retained its position as India’s leading startup hub, accounting for 33% of total funding, followed by Mumbai with a 21% share. 

Inflection Point Ventures, Rainmatter and Venture Catalysts were the most active seed-stage investors, while Peak XV Partners, Accel and Lightspeed Venture Partners led early-stage funding. Sofina, Elev8, and Lathe Investment emerged as key late-stage investors during the year.