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Indian Startup Funding Hits $630 Million in May 2026

Indian startup funding declined by 27.2% month-on-month to reach $630 million in May 2026, down from $865 million in April. This month’s total was largely boosted by Rapido’s substantial $240 million funding round, while no other startups secured deals exceeding $100 million, with only a few others raising lesser amounts. Among notable transactions, Hyderabad-based Skyroot Aerospace emerged as the first unicorn from India’s aerospace industry following a $60 million fundraising event. IPO activities remained quiet, with only Kissht making its debut on the stock market, while Zepto received approval from SEBI for its upcoming public issue. The month also saw significant layoffs, as Innovaccer and Adda247 collectively terminated around 540 employees.

According to data from Startup Superb, Indian startups raised nearly $630 million in funding for May 2026. This total comprised 12 growth and late-stage deals amounting to $492 million and 51 early-stage deals valued at $137 million. Additionally, there were 10 undisclosed deals throughout the month.

Month-on-Month and Year-on-Year Trends

Startup funding experienced a month-on-month drop of 27%, marking its lowest level since July 2025 when monthly totals slipped below $600 million. Year-on-year analysis shows a remarkable 45% decrease, making May 2026 the weakest month for startup funding in the last six years.

Top Growth-Stage Deals

In May 2026, growth and late-stage funding was predominantly led by mobility platform Rapido, which raised $240 million through Series F. Fintech startup Scapia secured $63 million, and Skyroot Aerospace became the nation’s first aerospace unicorn with $60 million raised. Edtech platform upGrad attracted $38 million, while home services startup Pronto raised $20 million. Ecofy, an NBFC targeting climate initiatives, raised $15 million in debt financing, and StrainX Bioworks, Wingreens, and Anveshan fetched amounts between $12.7 million and $13 million each. Country Delight concluded the list with a $7 million debt raise.

Top Early-Stage Deals

In the early-stage funding arena for May 2026, B2B e-commerce platform Fairdeal.Market led the way with $15 million raised. Semiconductor startups gained attention, with HrdWyr attracting $13 million and BigEndian Semiconductor raising $6 million. AI ventures also drew investor interest, as Human Archive raised $8.2 million while entertainment startup Mythik secured $5 million. Manufacturing startups Tiea Connectors and Mekr achieved funding of $8 million and $7 million respectively, while robotics company ANSCER Robotics gained $5.4 million. Home services platform Yes Madam raised $5.2 million, and skincare brand Chosen concluded the list with a $5 million round.

Mergers and Acquisitions

Acquisition activities spanned across fintech, AI, healthtech, consumer brands, and travel, signifying strategic expansion across various sectors. Noteworthy acquisitions included InMobi’s purchase of MobileAction to enhance its AI and mobile growth capabilities, and Netradyne’s acquisition of Moove to strengthen its AI portfolio. Fintech sector consolidation continued with Freo acquiring IndiaLends and Oxyzo pursuing GoldenPi. In consumer brands, Emami took a 60% stake in InCut Digital, while Wingreens acquired Safe Harvest. Healthtech remained dynamic as Innovaccer acquired CaduceusHealth and Vaidam Health took over CancerRounds.

City and Segment-wise Deals

Bengaluru led the startup funding landscape in May 2026, securing $411.14 million across 35 deals, which accounted for 65.26% of the total capital raised. Mumbai followed with $71.01 million from 11 deals (11.27%), while Hyderabad secured $60.4 million through two deals (9.59%). Delhi-NCR experienced 15 deals worth $44.88 million (7.12%), whereas Chennai recorded four deals amounting to $6.2 million (0.98%).

The fintech sector dominated in May 2026 with $97.2 million, representing 15.43% of the total capital through 10 deals. E-commerce trailed with 13 deals raising $43.44 million (6.89%), while AI recorded 11 deals worth $26.1 million (4.14%). The food and beverage sector saw five deals contributing $20.41 million (3.24%), and SaaS comprised 5 deals totaling $5.82 million (0.92%).

Series-wise Deals

May 2026’s funding activity favoured early and mid-stage rounds, led by Series A, contributing $73.62 million across 12 deals. Series B followed with $45.7 million from three deals, while Seed rounds accounted for 21 deals raising $39.36 million. Pre-Series A saw 10 deals worth $18.92 million, and Pre-Seed rounds remained modest with 16 deals contributing $5.2 million.

Layoffs, Shutdowns, and Departures

The month saw a rise in layoffs, with four startups, including Innovaccer, Adda247, Pocket FM, and Apna Mart, reducing their workforce, leading to around 680 employees losing their jobs. The ecosystem also witnessed one closure, as spiritual app DevDham ceased operations. Leadership changes were prevalent across the startup scene, with notable exits including Ujjwal Jain from Share.Market, Pawan Gupta from Fashinza, Sumit Gwalani from Fi Money, Sumit Jain from Unacademy, and Anurag Sharma from Pocket FM, raising the total to 12 senior-level departures. During this time, 32 key leadership appointments were made across various startups.

Trends

Layoffs returned sharply after a brief slowdown, as four startups let go of around 680 employees in May, compared to two layoffs in April, impacting about 120 employees. This increase indicates renewed pressure on startups to enhance efficiency while managing costs.

No new ESOP buybacks were recorded since seven startups collectively bought back ESOPs worth approximately $220 million in Q1 2026. However, April and May did not see any new buybacks.

The Supreme Court upheld a 28% GST on online gaming, affirming that once money is staked, the category difference between games of skill and chance becomes irrelevant for tax purposes. This ruling endorses tax claims exceeding Rs 1 lakh crore, posing significant challenges for gaming companies that sought GST solely on platform fees.

Physical AI emerged as a prominent topic in May, with entities like Pronto, Snabbit, and Urban Company’s InstaHelp leading discussions. Nonetheless, Snabbit and Urban Company distanced themselves from claims regarding Physical AI-driven home service initiatives.

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