Indian tech startup funding declined 18% to $11.7 billion in FY26, according to Tracxn. It reflects a cautious investor sentiment and shifting market dynamics across the ecosystem. According to the report, India ranked fourth-highest among global funders in FY 2025-26, behind the US, the UK, and China, and ahead of Germany and France.
Indian technology startups' total fundraise declined by 18 percent to USD 11.7 billion in 2025-26, market intelligence firm Tracxn said on Wednesday (April 8, 2026). The technology startups had raised USD 14.3 billion in the financial year 2025.
"India's startups raised USD 11.7 billion in FY 2025-26, marking an 18 percent decline from USD 14.3 billion in FY 2024-25, but a 20 percent increase compared to USD 9.7 billion raised in FY 2023-24," Tracxn's India Tech Annual Funding Report 2026 said.
"Early-stage funding (when start-ups plan to scale up business) showed strong momentum, rising to USD 4.8 billion in FY26, a 33 percent increase from USD 3.6 billion raised in FY 2024-25, and a rise of 37 percent compared to USD 3.5 billion raised in FY 2023-24,” the report added.
"Late-stage startups raised USD 5.6 billion in FY26, marking a 38 percent decline from USD 9.2 billion raised in FY25, but an 18 percent increase compared to USD 4.7 billion raised in FY24," the report said.
Seed-stage startup funding declined by 15 percent to USD 1.3 billion in FY26, from USD 1.5 billion in FY25. In 2025-26, India witnessed 13 funding rounds of more than USD 100 million, compared with 23 in FY25 and 13 in 2023-24.
"Large deals were driven primarily by the Enterprise Infrastructure, Enterprise Applications, and Fintech with companies raising notable capital, including Nxtra's USD 710 million PE round, Neysa's USD 600 million Series B round, and Inox Clean Energy's USD 344 million Series D funding," the report said.
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.
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.
FinTech and retail emerged as the top-performing sectors in FY 2025-26. Enterprise Applications received USD 3.6 billion in 2025-26, the same as in FY25, but a 23 percent increase from USD 2.9 billion in FY24. FinTech firms secured USD 2.4 billion in funding, marking a 14 percent increase from USD 2.1 billion in FY25 and a 27 percent rise from USD 1.9 billion in FY24.
Funding for retail startups declined by 32 percent to USD 2.4 billion in FY26, from USD 3.5 billion in 2024-25, and by 19 percent compared to USD 2.9 billion raised in FY24.
"On the IPO front, India Tech recorded 47 IPOs in FY 2025-26, marking a 52 percent increase over 31 IPOs in FY 2024-25 and a 47 percent increase compared to 32 IPOs in FY 2023-24,” the report said.
"Major IPOs during the year included Lenskart, Groww, and Meesho. There were 6 unicorns created in FY 2025-26, reflecting a 50 percent increase compared to 4 in FY 2024-25," the report added.
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Venture capital funding into Indian startups declined sharply in the first week of April, as the lack of high-value deals drove the value down. This decline also reveals the challenge the startup ecosystem continues to face in attracting capital amid the ongoing Middle East crisis.
There is uncertainty about the war's impact and how long the recovery will take. India's technology sector raised $10.9 billion in FY26, a drop of 23 percent compared to FY25 (and a rise of 13 percent compared to $9.7 billion in FY24), according to the Tracxn report.
Startup financing activity in Q1 2026 indicated that investors continued to support robust business models across industries such as EV mobility, deeptech, fintech, quick commerce, healthcare, and manufacturing in India.