Inside Q1 2026’s Mega Deal Drought: War, LP Shift & Growth Capital Gap

In Q1 overall capital inflows into Indian startups fell 26% YoY to $2.3 Bn during the quarter. More strikingly, the world’s third-largest startup ecosystem failed to record a single mega funding round

The West Asian conflict, which has now been paused for 15 days, hit the capital raising plans of Indian startups and VC firms in Q1 2026

According to Inc42’s survey of 70 investors, about 74% said they plan to raise capital from domestic LPs in the upcoming funding cycle, signalling a structural shift in LP preferences

Added to Saved Stories in Login VIEW SAVED STORIES .inc42-toggle-item-popup { display: none; position: relative; } .toggle-item-close { text-align: end; padding: 8px 12px 0px 10px; position: absolute; right: 0; cursor: pointer; } .toggle-items-content-main { display: block; position: relative; top: 27px; left: -204px; border-radius: 12px; background: #FFF; box-shadow: 0px 4px 24px 0px rgba(100, 100, 100, 0.25); width: 435px; height: 115px; } .toggle-items-content { display: flex; align-items: baseline; justify-content: center; padding-top: 22px; } .toggle-items-content .items-content-text .h4-saved-story{ color: #000; font-size: 20px; font-style: normal; font-weight: 700; line-height: normal; text-transform: capitalize; margin: 2px 0 10px 6px; } .toggle-items-content .items-content-text .myInc42-plus-dark { width: 100px !important; } .toggle-items-content .items-content-text .myInc42-light { width: 80px !important; } .toggle-items-content .items-content-text img{ height: 22px; } .view-my-feed-btn { width: 100%; text-align: center; display: flex; justify-content: center; } .view-my-feed-btn a { width: auto !important; } .view-my-feed-btn button { border-radius: 4px; background: linear-gradient(180deg, #DA1B4D 0%, #E23026 100%); color: #fff; font-size: 12px; display: inline-block !important; min-width: 162px; width: 162px !important; height: 34px !important; font-style: normal; font-weight: 700; line-height: normal; padding: 10px; cursor: pointer; } .CustomIconStyled { position: absolute; right: 180px; top: -80px; } .SubDropdownModelShare .sub-arrow-icon { width: 76px; height: 80px; position: relative; overflow: hidden; box-shadow: none; } @media (max-width:767px) { .toggle-items-content .items-content-text........

© Inc42