Indian Startups Raise $1.2 Billion in February 2026: Funding Doubles Year-on-Year in Strong Rebound
In a powerful signal of renewed investor confidence, Indian startups have raised approximately $1.2 billion in funding during February 2026, marking a 2.2x increase compared to the same month last year.
According to data from market intelligence platform Tracxn, compiled in the ETtech Deals Digest, the funding secured between February 1 and 27 represents a 62.8% jump from January 2026, when startups raised around $777.2 million across 112 rounds .
This surge comes even as the number of funding rounds declined slightly to 128, compared to 170 in February 2025, indicating a trend toward larger, more concentrated deals rather than fragmented small-ticket investments .
The Numbers: February 2026 at a Glance
| Metric | Value |
|---|---|
| Total Funding (Feb 1-27, 2026) | ~$1.2 billion |
| Year-on-Year Growth | 2.2x (from $574.8 million in Feb 2025) |
| Month-on-Month Growth | 62.8% (from $777.2 million in Jan 2026) |
| Number of Rounds | 128 |
| Last Week Funding (Feb 21-27) | ~$152.2 million |
The data underscores a significant rebound in India’s startup ecosystem, which has weathered a challenging funding winter over the past two years. The 2.2x year-on-year growth signals that investor appetite for Indian innovation is firmly back .
Top Deals of February 2026
1. Neysa: $1.2 Billion Investment Led by Blackstone
The month’s standout deal was Neysa, a cloud infrastructure startup, securing a massive $1.2 billion investment led by global alternative asset manager Blackstone . The funding is structured as:
- $600 million primary equity infusion from Blackstone-affiliated funds and co-investors (included in monthly funding tally)
- $600 million planned debt financing (to be secured subsequently)
The round also saw participation from TVS Capital, 360 One Asset Management, and existing backer Nexus Venture Partners . This landmark investment positions Neysa as a key player in India’s sovereign AI cloud ecosystem, with founder Sharad Sanghi recently signaling IPO plans in the coming years .
2. Idfy: $52 Million for Identity Verification
Identity verification and fraud detection startup Idfy secured $52 million in a fresh funding round from Neo Asset Management Secondaries Fund, with participation from existing investors Blume Ventures, Elev8, and others .
3. The Whole Truth: $51 Million for Clean-Label Food
Clean-label food startup The Whole Truth raised approximately $51 million in a round led by Sofina and Sauce.vc. The round, comprising primary and secondary capital, saw participation from existing investors Peak XV Partners and Rainmatter Health, along with Ayra Ventures. Early backers of the brand include Z47 (formerly Matrix Partners) .
4. Varaha: $45 Million for Climate Tech
Climate tech startup Varaha raised $45 million in a funding round led by WestBridge Capital. The company will receive the funding in two tranches, starting with an initial $20 million .
5. Supertails: $30 Million for Petcare
Petcare products and services firm Supertails raised $30 million in a round led by Venturi Partners, with participation from Nippon India Digital Innovation and Titan Capital. Existing investors, including Fireside Ventures, RPSG Capital Ventures, Sauce VC, and Saama Capital, also participated .
6. Other Significant Deals
- Xflow (cross-border payments): $16.6 million Series A led by General Catalyst, Stripe, and PayPal Ventures
- Freed (debt resolution): ~₹60 crore Series A2 led by Aavishkaar Capital
- Olyv (digital lending): ~₹207 crore Series C co-led by SMBC Asia Rising Fund and Fundamentum Partnership
- Stable Money (fixed-income investments): ~$25 million pre-Series C
Sectoral Trends: Where Capital Is Flowing
1. AI and Deep-Tech Infrastructure
The Neysa deal dominates headlines, but it’s part of a broader trend: investor conviction in India’s AI and deep-tech infrastructure is strengthening. With the government’s recent approval of ₹10,000 crore Fund of Funds 2.0 (focused on deep tech and manufacturing innovation), this sector is poised for continued growth .
2. Fintech: Selective but Steady
Fintech funding remained active in February, with multiple mid- and growth-stage transactions. According to industry experts cited by ETBFSI, investors are placing greater emphasis on revenue visibility, capital efficiency, and scalable distribution models rather than rapid customer acquisition alone .
Key fintech deals included:
- Xflow ($16.6 million for cross-border payments)
- Freed (~₹60 crore for debt resolution)
- Olyv (~₹207 crore for digital lending)
- Stable Money (~$25 million for fixed-income investments)
Experts note that regulatory compliance, licensing approvals, and governance standards are increasingly factored into due diligence processes. Partnerships with banks and non-bank lenders are enabling fintech platforms to scale within structured compliance environments .
3. Consumer and D2C
The Whole Truth and Supertails represent the continued strength of India’s direct-to-consumer (D2C) ecosystem. Both brands have built strong consumer loyalty and are now scaling with institutional backing.
4. Climate Tech
Varaha’s $45 million round underscores growing investor interest in climate solutions—a sector that has seen consistent policy support and increasing corporate demand for carbon tracking and sustainability tools.
The February Context: Policy Tailwinds
Fund of Funds 2.0 Approval
Earlier in February, the Union Cabinet approved Startup India Fund of Funds 2.0 with a corpus of ₹10,000 crore (approximately $1.1 billion) to mobilize venture capital for the country’s startup ecosystem .
Key features:
- Segmented funding approach supporting deep tech, tech-driven innovative manufacturing startups, and early-growth stage companies
- Mobilizing long-term domestic capital and strengthening the venture capital ecosystem
- Broadening investment beyond major metropolitan centers
- Targeting high-risk capital gaps in priority areas tied to self-reliance and economic growth
Deep Tech Recognition Framework Updates
The government also revised the Startup India recognition framework, introducing:
- A new dedicated category for “Deep Tech Startups”
- Turnover limit for startup recognition raised to ₹200 crore
- Deep tech startups given an expanded eligibility window of up to 20 years from incorporation and a turnover limit of ₹300 crore
Together, these policy changes place deep tech and innovation-led manufacturing at the center of India’s state-backed startup financing architecture .
Comparative Context: February 2025 vs. February 2026
| Metric | February 2025 | February 2026 | Change |
|---|---|---|---|
| Total Funding | $574.8 million | ~$1.2 billion | +109% |
| Number of Rounds | 170 | 128 | -25% |
| Average Round Size | $3.38 million | $9.38 million | +177% |
The data reveals a clear shift: fewer deals, but much larger checks. Investors are concentrating capital on high-conviction startups with proven business models, strong unit economics, and clear paths to profitability.
This contrasts with February 2025, when the ecosystem was still recovering from the funding winter. At that time, startups raised $1.65 billion (a different data set including debt) with 19.5% monthly growth but a 20% year-on-year decline .
The Big Picture: What This Means for India’s Startup Ecosystem
1. Renewed Global Confidence
The participation of marquee global investors—Blackstone, General Catalyst, Stripe, PayPal Ventures, Sofina, WestBridge Capital—signals that international capital sees India as a core part of its emerging market allocation.
2. Shift to Quality and Scale
The decline in number of rounds alongside increased total funding indicates a flight to quality. Investors are backing fewer startups but with larger checks, favoring those with:
- Proven product-market fit
- Strong unit economics
- Clear path to profitability
- Scalable business models
3. Deep-Tech Momentum
The Neysa deal, combined with policy support for deep tech, suggests that India’s deep-tech ecosystem is entering a new phase. Startups building sovereign capabilities in AI infrastructure, semiconductors, defence technology, and climate solutions are attracting serious capital.
4. Consumer Brands Still Attractive
Despite the deep-tech surge, consumer brands like The Whole Truth and Supertails continue to attract significant funding. India’s massive domestic market and rising disposable incomes create enduring opportunities for brands that build trust and loyalty.
5. Fintech Maturing
The fintech sector is transitioning from hypergrowth to sustainable scaling. Investors are rewarding companies with strong distribution networks, regulatory compliance, and clear profitability pathways.
What This Means for Founders
1. Build for Scale and Sustainability
The days of raising small rounds on thin business plans are over. Investors are backing companies that can demonstrate:
- Large addressable markets
- Defensible technology or brand moats
- Clear unit economics
- Path to profitability
2. Deep Tech Is a Priority
If you’re building in AI infrastructure, semiconductors, defence technology, climate tech, or other deep-tech domains, the funding environment is increasingly favorable—especially with policy tailwinds from Fund of Funds 2.0 and deep-tech recognition updates.
3. Consumer Brands Need Authenticity
The success of The Whole Truth and Supertails shows that authentic, mission-driven brands can still attract capital. Consumers are increasingly discerning, and brands that build genuine trust are rewarded.
4. Fintech Requires Compliance
For fintech founders, regulatory compliance, governance standards, and partnerships with regulated financial institutions are no longer optional—they’re central to fundraising success.
What This Means for Investors
1. Follow the Policy Tailwinds
Government initiatives like Fund of Funds 2.0 and deep-tech recognition create aligned incentives for investment in priority sectors.
2. Look for Capital-Efficient Models
The emphasis on unit economics and profitability means investors should prioritize startups with efficient customer acquisition, strong retention, and clear monetization.
3. Support Portfolio Companies Through Scale
With larger rounds, portfolio companies need more than just capital—they need operational expertise, network access, and strategic guidance to deploy funds effectively.
4. Consider Co-Investment Opportunities
Syndication with global investors (like Blackstone in Neysa) and domestic funds can provide diversification and validation.
Conclusion: A Maturing Ecosystem in Full Flow
February 2026 has delivered a powerful message: India’s startup ecosystem is not just recovering—it’s maturing, scaling, and attracting serious global capital.
The $1.2 billion raised, more than double last year’s figure, reflects:
- Renewed investor confidence in India’s innovation story
- Larger, more concentrated deals backing proven winners
- Policy tailwinds supporting deep tech and manufacturing
- Sectoral diversity across AI infrastructure, fintech, consumer, and climate tech
- Global participation from marquee international investors
While the number of deals has declined, the quality of companies receiving funding has never been higher. The ecosystem is shifting from broad-based hype to focused, high-impact execution—and the numbers show it.
As the government rolls out Fund of Funds 2.0 and deep-tech recognition frameworks, and as global investors continue to deploy capital, India’s startup story is entering its most exciting chapter yet.
The $1.2 billion February figure is not just a number—it’s a signal of what’s to come.
