India tech funding rises 12% to $7.2 bn in H1 2026 but deal count shrinks

Technology startups raised $7.2 billion in the first half of 2026, with larger funding rounds driving growth even as deal volumes, investor participation and first-time funding declined

The technology startup ecosystem in India attracted $7.2 billion in funding during the first half of calendar year 2026, marking a 12 per cent year-on-year (Y-o-Y) increase. However, even as funding increased, deal count fell sharply, according to a report by market intelligence platform Tracxn.

 

The India Tech H1 2026 Geo Semi Annual Report shows that between January 1 and June 24, funding activity became increasingly concentrated in a smaller set of companies as the total number of funding rounds declined 43 per cent to 652.

 

The report noted that the trend of fewer but larger funding rounds has intensified since 2022 as investors have focused on high-conviction bets amid a more disciplined funding environment.

   

Notably, a significant portion of the capital raised during the period was concentrated among a handful of companies.

 

The top three funding rounds — CRED's $900 million raise, Nxtra's $710 million round and Neysa's $600 million funding — accounted for $2.2 billion, or nearly 31 per cent of the total capital deployed during the period.

 

Artificial intelligence (AI) emerged as a key theme as AI-native startups achieved unicorn status faster than companies in other sectors.

 

Out of the five companies that crossed the $1 billion valuation mark in H1 2026, AI startups Neysa and Sarvam achieved unicorn status in less than three years.

 

In contrast, the other three new unicorns — KreditBee, Skyroot and Square Yards — took between eight and 12 years to cross the $1 billion valuation mark.

 

On exit activity, India recorded 13 initial public offerings (IPOs) in H1 2026, up from 12 in the year-ago period.

 

Among the largest listings were Fractal Analytics, which debuted with a market capitalisation of $1.7 billion, followed by Amagi at $858 million and Shadowfax at $782 million.

 

The average time taken for a startup to move from its first funding round to an IPO also dropped significantly to 8.1 years from 14.5 years earlier.

 

In the first half of the year, there were 58 acquisitions.

 

Major transactions included Adani Energy Solutions' acquisition of IntelliSmart for $319 million and upGrad's acquisition of Unacademy for $216 million.

 

Despite stable funding and exit activity, the platform highlighted several concerns.

 

The number of companies entering the soonicorn club fell 47 per cent, while the number of first-time funded startups declined 31 per cent to 218.

 

At the same time, the number of unique institutional investors participating in the startup ecosystem fell to 488, compared with a peak of 824 in H1 2024.