VC funding into Indian startups plunges 66% in October

Venture capital (VC) funding into Indian startups touched a new low in October, with a decline of 66% against October of last year.

When compared with the VC funding raised in September 2025, the drop was 49%.

The total VC funding in October came in at just $581 million as compared with $1.6 billion in October 2025, according to YourStory Research. In the month of September 2026, the funding amount was $1.1 billion.

October saw 107 VC deals. In contrast, the September month saw 100 deals but the amount was higher. The same was the case in October 2025, where the number of deals was 99.

This steep drop in VC funding in October was primarily due to the complete absence of large value deals for the entire period. The highest funded deal for the month was from Even Healthcare at $50 million.

The last such decline was seen in May when the total reached $651 million.

These developments highlight the challenges faced by the startup ecosystem while raising capital. Global investors, particularly in the US, are pouring capital into AI, while India still lacks a significant number of viable AI startups.

Few AI firms in India that have managed to pull funding include Sarvam, Emergent or Neysa. This shows India has a long way to go to establish AI startups that gain investor interest.

Through the first 10 months of 2026, Indian startups raised $10.4 billion, putting the ecosystem on pace to match or surpass the $12 billion total recorded in 2025.

This low funding momentum was also reflected in the stage wise funding category. The late-stage funding category which generally attracts the highest amount saw only $97 million raised for the month of October. The top category was from the growth stage (250 million) followed by the early stage ($221 million).

The dominant trend for the Indian startup ecosystem for the last three years has been the highest volume of activity in terms of number of deals has been in the early-stage funding category but this segment does not draw in large amounts of money.

In terms of the top three segments that raised capital in October, the top categories were D2C, healthtech and automotive. The AI segment just raised $42 million in the month.

The top three cities which received VC funding in October were the usual ones: Bengaluru, Delhi-NCR and Mumbai. By and large, these three metros have consistently garnered an overwhelming majority of funding flowing into Indian startups with an occasional occurrence some other metros like Chennai, Hyderabad or Pune making it to the top three.

Overall, it has not been a positive picture for the Indian startup ecosystem in terms of VC funding so far and the only hope is that the situation will turn out for the better next year.

Edited by Affirunisa Kankudti