Funding concentration in India's AI sector, investors prefer large deals

According to a report by The Economic Times, a major shift is being witnessed in the fundraising process within India's artificial intelligence (AI) sector, where the proportion of large deals has increased, but the number of winning startups is declining. During the first nine months of the year 2026, Indian AI startups collectively raised a total of $1.6 billion. These figures indicate that investors are now focusing more on selective and large projects.

The report clearly notes that projects associated with AI infrastructure have received significant investments. In contrast, application-based startups are facing difficulties in securing funding. For these companies, not only raising funds, but also attracting and retaining customers has become a major challenge. Due to this inequality in the distribution of investments, a clear division is visible in the market, where large transactions are capturing a major share of the total funding.

This situation suggests that investors in the Indian AI ecosystem are now relying more on companies with established and robust infrastructure rather than taking risks. Due to this trend, the path to securing funding has become more difficult for small and emerging startups. This type of centralization in the AI sector could become a barrier for small players bringing innovation in the future, as most of the capital investment has remained limited to a restricted number of companies. It will be interesting to see in the coming times how this trend affects the growth of the Indian tech market.