Private equity and venture capital funding in Indian startups rebounded strongly in the first quarter of 2026, pointing to renewed investor confidence. Total investments climbed to $4.76 billion, up 30% from $3.65 billion in Q4 2025, according to data from DealStreetAsia DATA VANTAGE‘s latest report India Deal Review: Q1 2026.
Deal activity touched a three-year high, with 350 transactions recorded during the quarter compared to 287 in the preceding period, the data showed.
On a year-on-year basis, funding value rose 13.9% from $4.18 billion in Q1 2025, while deal volume edged up 3.6% from 338 deals a year earlier.
Even as overall funding strengthened, the number of megadeals—transactions worth $100 million or more—fell to four from seven in the previous quarter. However, their combined value increased to $1.8 billion from $1.34 billion, largely driven by Neysa’s $1.2-billion funding round.
Other significant transactions during the quarter included KKR’s planned investment of up to $310 million in Allfleet India Private Limited and PMI Electro Mobility, along with Weaver Services’s $156-million two-tranche fundraise completed in March.
By sector, software emerged as the leading industry, attracting $1.62 billion across 53 deals in Q1 2026. Collectively, the top three sectors—software, financial services, and transportation services—accounted for $2.74 billion in funding, representing 57% of the total deal value in Q1 2026.
AI leads funding surge
AI and machine learning emerged as the most funded vertical in Q1 2026, raising $1.43 billion across 37 deals—more than tripling from $414.4 million across 24 deals in the previous quarter. Neysa accounted for the largest round, followed by Mozark ($40 million), Deccan AI ($25 million), Constelli ($20 million), and Liquidnitro Games ($19.1 million), among others.
E-commerce ranked second with $612.3 million raised across 77 deals, marking a 34.2% decline from $931.2 million in Q4 2025. Within e-commerce Shadowfax Technologies led with a $95-million round ahead of its IPO.
Fintech lending occupied third place, securing $434.8 million across 15 deals.
Funding rises across stages, debt triples
Growth-stage investments—classified as Series B or later rounds (including private equity and pre-IPO rounds)—collectively raised $1.78 billion in Q1 2026, though its share in total funding fell to 37% from 45.5% in Q4 2025. Deal volume increased to 47 from 41 in the previous quarter.
Seed and pre-seed funding reached $208.4 million across 114 deals, up from $167.8 million across 94 transactions in Q4 2025. The largest round was raised by MeltPlan, which secured $10 million in a seed round led by Bessemer Venture Partners.
Debt funding surged to $692.7 million in Q1, from $209.6 million in Q4 2025.
Mumbai overtook Bengaluru to become India’s top destination for venture capital investment in Q1. Startups in the city raised $1.79 billion across 39 deals, a sharp jump from $769.3 million through 37 deals in the previous quarter. Key fundraises during the period included Neysa, Weaver Services, The Whole Truth, IDfy, Ecofy, and Mozark, among others.
Bengaluru, which led in Q4 2025 with $1.54 billion raised across 113 deals, slipped to second place with $1.29 billion from 138 deals in Q1 2026.
“Velocity of dealmaking has also gone up significantly over the last 18 months, except, of course, for the blip over the last month after the Iran crisis. This shows that there is enough appetite and dry powder that needs to be deployed and that good ideas and good teams are able to raise money,” said Vinay Singh, Partner, Fireside Ventures.
The India Deal Review: Q1 2026 report offers data and insights on:
- Quarterly fundraising trends
- Top industries and verticals
- Top funding destinations
- Megadeal value and volume
- Most active investors
