2025 was the transition year. 2026 will be the rebalancing year. That’s Inc42’s thesis for the upcoming year, where we expect a greater degree of maturity when it comes to fundraising, public markets and key sectors such as deeptech, AI, consumer services, ecommerce and fintech.

The Indian startup ecosystem has already absorbed the correction of the past two years and the biggest testament to this was the fact that 2025 was a record-breaking year for startup listings.

More than 18 startups went public in 2025, and the cumulative market cap of listed new age tech companies is now close to $150 Bn. The next 12 months will build on these structural changes of 2025.

Broadly speaking, we will see selective capital deployment by investors, after a year or two of reserving dry powder. Founders and startup CEOs will prefer exit readiness over perpetual fundraising cycles as this distracts management from operational and profitability focus.

This is perhaps why execution depth will win over narrative-driven momentum, which has reigned supreme from 2021 till now. Operating leverage, unit economics flexibility and margin accretion will be the name of the game in 2026.

Here’s where Inc42 sees India’s tech and startup ecosystem heading in 2026.

Indian Startups In 2026: Trends & Predictions

As per Inc42’s research, startup funding in 2026 will recover modestly to $11.5 Bn – $13.8 Bn, remaining structurally closer to 2019–20 levels than the 2021 peak. The bottom line here is that capital is available, but will be concentrated, gated, and domestically anchored.

What Changes In 2026

• While there will be some funding recovery thanks to new frontiers and the rise of deeptech,this will be without the exuberance seen in 2021-22. Funding stabilises, but growth-era behaviour is not expected to return as market leaders move towards improved profits and not just growth.
• As a result, patient and conviction capital will come into play. Investors will deploy fewer, larger cheques into fewer companies. Profitability will be the primary entry point at growth and late stage, if IPOs are not on the cards.
• Shift from risk-averse globally arbitraged capital to locally anchored, patient capital and domestic investor confidence will also stem from deploying capital selectively in startups with a path to profitability.

Profitability & Unit Economics Become The New Fundraising Filter

By 2026, profitability and unit economics are no longer optimisation goals, they are the price of entry for capital.

What Changes In 2026

• Inc42’s Annual Indian Startup Trends Report, 2025 shows that over one-third of Indian startups chose profitability and runway extension over fundraising in 2025, reframing capital discipline as a competitive advantage rather than a slowdown signal.
• The takeaway is that profitability is no longer limited to mature companies; even early and growth stage startups are building with EBITDA visibility as a baseline expectation.
• As revealed in our annual founder survey, more than 34% of startups did not attempt to raise capital; among those that did, founder bandwidth and low fundraising priority created the most friction, signalling a pivot from pitch cycles to operational focus.
• Market expansion and customer retention emerge as the primary growth levers, positioning revenue quality, not burn velocity, as the path to scale.

M&A IPOs: The New Paradigm For Exits

Liquidity returns, but through structured exits, not endless private rounds. Founders move from fundraising optimisation to exit readiness.

Liquidity appetite is shifting toward........

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