Indian startups raised $5.2 billion in the first half of 2026, spread over 501 deals. That's a 9% drop from the same period last year. But there's a twist. The number of deals rose by 7%, signaling a change in how investors are playing their cards.
The overall funding dip was mainly due to a sharp decline in late-stage investments. Those fell by 27% to $2.2 billion. The median check size for these deals took a nosedive, plummeting 68% to $10 million. Investors are taking a cautious approach when it comes to pouring money into capital-heavy tech companies. Yet, the number of late-stage deals only dipped by 4% to 66, suggesting that while investors are still in the game, they're going in with smaller bets.
On the flip side, growth-stage startups were the winners in this scenario. Funding for these startups climbed 15% to $2.3 billion. Deal volume shot up 33% to 190 transactions. Although the median ticket size for growth-stage deals dropped by 25% to $6 million, the surge in activity points to a diversification in investment strategies. Investors are spreading their bets across Series A and B startups.
Early-stage funding held its ground. Seed-stage startups pulled in $478 million, an 18% jump from last year. The median ticket size stayed stable at $1 million, showing that investors still have faith in emerging tech ventures.
The AI sector was the standout performer. AI startups raked in $676 million across 57 deals, marking a significant year-on-year increase. A significant chunk of this was Sarvam's $234 million round in June. This boom is partly thanks to the government's IndiaAI Mission, which has boosted confidence through its support for AI infrastructure and research.
Deeptech wasn't far behind, with $365 million raised. Meanwhile, traditional sectors like fintech and ecommerce saw some corrections. Fintech, still the most funded sector, experienced a 19% drop to $1.3 billion. Ecommerce funding took a 35% hit, falling to $779 million, though it led in deal count with 112 transactions.
Bengaluru kept its crown as India's startup capital, drawing $2.7 billion across 165 deals. That's over half of the country's total funding. The city attracted a lot of AI, fintech, and deeptech startups. Delhi NCR and Mumbai followed with $917 million and $587 million in funding, respectively.
Despite the overall cooling in funding, the Indian startup ecosystem saw new unicorns, including Sarvam, JusPay, KreditBee, Square Yards, and Skyroot.
For exits, mergers and acquisitions were the popular choice, with 52 M&A deals in the first half of 2026. This trend contrasts with the muted IPO activity, as market volatility keeps IPOs at bay. Investors now expect secondary buyouts and strategic M&A to lead the way for startup exits, with IPOs likely on hold until companies achieve steady profitability.
