BENGALURU: Indian startups raised $2.2 billion in the July–September quarter of 2026, a modest 5 per cent increase from $2.1 billion a year earlier, according to Inc42's quarterly funding report published on Wednesday.
The headline figure masks a narrowing market. The number of deals fell 13 per cent to 210 from 240, as investors put more money into fewer companies and grew more selective about where they placed new bets.
The quarter belonged to startups at the growth stage. Funding for Series A and B rounds rose 38 per cent to $1.1 billion across 90 deals. Late-stage funding fell 10 per cent to $994 million, and early-stage funding dropped 18 per cent to $164 million.
The decline at the early stage is the clearest sign of caution. Seed and pre-Series A investors backed noticeably fewer new companies than a year ago, preferring to put money behind businesses that already have customers and revenue.
Large cheques were more common than a year earlier. Four startups raised more than $100 million each, compared with just one in the same quarter of 2025. AI startup Emergent raised $130 million, taking it to unicorn status. Electric vehicle maker River raised $120 million, and fintech company Navi and spacetech firm Pixxel raised $100 million each.
Artificial intelligence was the standout sector, attracting $438 million across 35 deals, a jump of 265 per cent from a year earlier. Cleantech was close behind at $433 million, and deeptech raised $290 million.
The pattern held into the final weeks of the quarter. In the week of September 21 to 25, startups raised $203.4 million across 21 deals, with electric motorcycle maker Ultraviolette raising $85 million and enterprise AI company Ema $77 million.
Traditional internet sectors lost ground. Fintech funding fell 11 per cent to $249 million and ecommerce funding dropped 31 per cent to $245 million, as investors shifted towards hard technology and businesses with clearer paths to profit.
Deeptech’s $290 million reflects growing investor interest in areas such as space technology, where Pixxel’s $100 million round was among the largest of the quarter, and in hardware and advanced manufacturing.
Bengaluru-based startups raised $1.4 billion, 64 per cent of the national total and 157 per cent more than a year earlier. Delhi NCR followed with $301 million and Mumbai with $223 million. The city's lead reflects its concentration of AI, deeptech and electric vehicle companies, the sectors investors favour most.
Exit activity picked up. Mergers and acquisitions rose 69 per cent to 22 deals in the quarter, and six new-age technology companies went public. The report noted that investors are increasingly turning to secondary sales and buyouts for liquidity rather than waiting for listings.
In a secondary sale, existing shareholders such as early investors or employees sell their stakes to new buyers; the startup itself raises no fresh capital. Such deals let early backers cash out without waiting years for a stock market listing.
Separate data from Tracxn shows 20 acquisitions in India's technology sector in the first nine months of the year, with disclosed deal values of about $1.37 billion, led by L'Oréal's purchase of personal care brand owner Innovist.
Capital is available, but it is concentrated. Startups building in AI, clean energy and deep technology with clear revenue paths are raising large rounds, while consumer internet companies and very early-stage ventures face a tougher market. With deal counts falling, founders should expect longer fundraising timelines and closer scrutiny of their numbers before a term sheet arrives.
