Deep tech startups in India are raising more money than before, but fewer of them are getting funded. Data from Tracxn shows a clear shift in how capital is being deployed across the sector. While total funding has increased steadily over the past three years, the number of investment rounds has declined.
In FY24, Indian deep tech start-ups raised $1.06 billion across 450 rounds. A year later, funding rose sharply to $1.74 billion across 449 rounds. By FY26, total funding climbed further to $1.93 billion even as the number of rounds fell to 341, a 24% drop from FY24 levels.
Early data for FY27 suggests the same pattern may continue. April 2026 recorded 16 rounds totalling $68.4 million.
“Investors are concentrating capital into fewer companies where they have higher conviction, which is leading to larger round sizes even as overall deal activity declines,” an analyst from IDBI Capital Markets & Securities said.
The same pattern is visible across India’s wider start-up ecosystem.
Total funding across sectors rose from $35.1 billion in FY25 to $41.2 billion in FY26. Over the same period, the number of funding rounds dropped sharply from 3,670 to 2,600, a 29% decline.
The divergence between capital and deal count has been particularly sharp in recent months. Between January and April 2026, deep tech start-ups raised $992 million across 100 rounds, compared with $564 million across 138 rounds in the same period a year earlier, a 76% increase in funding value alongside a 28% decline in deal count.
Policy support
Government policy has increasingly aligned with the longer timelines and higher capital needs of deep tech businesses.
In February 2026, the Indian government updated its start-up classification rules, extending the eligibility period for deep tech start-ups from 10 years to 20 years and raising the turnover threshold for benefits to `300 crore.
Alongside this, the government has been operationalising a `1 lakh crore ($12 billion) Research, Development and Innovation (RDI) fund to support deep tech and research-driven start-ups.
Private capital has also scaled up. A consortium of US and Indian investors, including Accel, Blume Ventures and Celesta Capital, came together under the India Deep Tech Alliance to mobilise long-term capital for the sector.
The alliance’s members have collectively committed more than $2.5 billion toward deep tech investments in India over the coming years, including $1 billion earmarked specifically for artificial intelligence.
Despite the capital increase, investors say the bar for funding has risen.
Prayank Swaroop, a partner at Accel, said India has yet to produce a large AI-native company operating at a global scale. “We don’t yet have an AI-first company in India which is $40-$50 million of revenue, if not $100 million, in a year’s time frame, and that is globally happening,” he told TechCrunch.
Structural factors are also driving the shift toward larger, more concentrated investments. Deep tech companies typically require longer development cycles and more capital before reaching commercial scale, making broad, experimental funding strategies harder to sustain.