India’s startup funding increased 5% year-on-year to $2.2 billion in the third quarter of 2026, despite a 13% decline in deal count to 210, according to inc42.com. The quarter saw two new unicorns emerge, with AI and cleantech sectors leading investment activity. Bengaluru remained the dominant startup hub, raising over $1.4 billion across 80 deals during the period.
Investment was concentrated in growth-stage rounds, with Series A and B funding surging 38% year-on-year to $1.1 billion. Late-stage funding declined 10% to $994 million as investors adopted a more cautious stance. Early-stage funding also fell, but the median cheque size increased, indicating a focus on fewer, stronger seed investments. AI attracted $438 million in funding, up 265% year-on-year, driven by several large rounds, while cleantech raised $433 million, according to inc42.com.
The rise in AI funding underscores its growing importance in India’s startup ecosystem, outpacing traditional sectors such as fintech and ecommerce, which saw declines of 11% and 31% respectively. Deeptech funding also climbed 176% year-on-year to $290 million, with Bengaluru capturing 65% of this capital. Delhi NCR and Mumbai followed with $301 million and $223 million respectively. Over half of surveyed investors consider Bengaluru best positioned to lead India’s deeptech ecosystem by 2030.
The quarter’s funding trends reflect a shift toward more selective investing, prioritizing growth-stage startups in emerging sectors. The next major data point will be the Q4 2026 funding report, expected to provide further insight into whether AI and cleantech maintain their momentum, inc42.com reported.