The total funding for the first quarter-January to March 2026-was $3.2 billion from 315 deals. The amount during the same period of 2025 was $2.5 billion from 312 deals, according to YourStory Research.

However, on a month-on-month basis, VC funding actually declined by 37%. Total VC funding for March 2026 stood at $888 million, compared to $1406 million in February this year. Compared to March 2025, where VC funding was $1145 million, the dip was 22%.

VC funding over the last four years, on a quarterly basis, has been uneven, rising and falling.

VC funding for the first quarter of 2026 saw an increase despite the absence of many large deals. There were just seven deals with a deal value of above $50 million: Arya.ag ($80 million), Greencell ($89 million), Drivn ($80 million), The Whole Truth ($51 million), IDfy ($52 million), Neysa ($600 million), and Weaver Services ($155 million). And there were just two transactions which crossed $100 million.

During the first quarter of 2026, there were a sizeable number of transactions in the $30 million-90 million range. This lifted the overall momentum of VC funding during the period.

At the same time, there seems to be no correlation between the number of deals and the funding amount raised. In the first quarters across the last four years, the average number of deals has consistently remained around 300, but there has been a big variation in the funding amount raised.

In the first quarter of 2026, pre-Series A funding saw the highest traction in terms of number of deals: 167 deals raising $297 million. This shows that entrepreneurial activity is still thriving in the Indian startup ecosystem and investors continue to bet on ventures. During this period, the growth-stage category raised the highest amount of funding.

Among the sectors that got funding during the quarter, the AI (artificial intelligence) segment raised the highest amount. This was primarily due to the $600-million funding raised by Neysa. Meanwhile, there has been a steady increase in the number of AI startups getting funded, and this is a welcome trend.

Among cities with the highest funding in the first quarter, Mumbai, Bengaluru, and Delhi-NCR dominated the scene. This indicates that both entrepreneurs and investors have not made any meaningful inroads beyond these major cities.

While VC funding has shown an increase in the first quarter, this does not guarantee sustained momentum in the second quarter as the global macroeconomic situation still remains tense, and this will have a bearing on the fund inflow into Indian startups in the future.

Edited by Swetha Kannan