Tech funding in Karnataka sees 26% increase: Report

Most of the capital went to late-stage companies, and late-stage funding rose by 32% to $2.7 billion

Updated - November 03, 2026 10:59 pm IST - Bengaluru

This marks a sharp reversal from the corresponding period in 2025, when funding in the State’s tech ecosystem had declined by 40% compared to the first nine months of 2024. | Photo Credit: Getty Images

Karnataka tech companies raised $4.6 billion in the first nine months of 2026 — a 26% increase compared to $3.7 billion raised in the first nine months of 2025 — according to the latest report by market intelligence firm Tracxn.

This marks a sharp reversal from the corresponding period in 2025, when funding in the State’s tech ecosystem had declined by 40% compared to the first nine months of 2024. This also points to a possible recovery in investor confidence.

More capital, fewer rounds

While the overall quantum of capital has gone up, the ‘Karnataka Tech: 9M 2026 Report’ has observed a drop in the number of funding rounds, which declined by 35% to 397 from 610. This translates to a higher capital concentration with a fewer number of startups.

Most of the capital went to late-stage companies. Late-stage funding rose by 32%, to $2.7 billion, suggesting greater investor confidence in mature startups that have demonstrated a viable business model, revenue growth and a sizeable customer base. This also hints at a more selective funding environment, where investors have become choosier, rather than a broad-based recovery. This is in contrast to the corresponding period in the previous year, when late-stage funding witnessed a 59% drop compared to 2024.

The largest funding rounds were led by CRED, which raised $540 million in a Series H round in June 2026, backed by Meta, followed by Sarvam’s $255 million Series B round in June 2026 and Rapido’s $240 million Series F round in May 2026. Together, these three rounds accounted for approximately $1 billion of total funding in the first nine months of 2026. Late-stage took 57% of all funding.

Early-stage funding also rose by 35% to $1.7 billion. However, seed-stage funding fell by 32% to $281 million, as per the report, suggesting a degree of unwillingness among investors to take risks.

According to the report, FinTech, Enterprise Applications and Auto Tech emerged as the top-funded sectors, with Bengaluru accounting for nearly all the funding raised. Mysuru ranked second with $8 million in funding, compared to $1,65,000 in the corresponding period in 2025. Other cities contributed less than 1% of the State’s total funding.

Published - November 03, 2026 10:00 pm IST

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