For the start-up ecosystem in Karnataka, the year 2025 was one of ebbs and flows. But as the year comes to an end, the net sentiment seems to be positive, and stakeholders are looking at 2026 with optimism.
Highlights
In a year when AI became the centre of conversations, Bengaluru is ranked fifth among the top 50 AI ecosystems globally, as per the Global Start-up Ecosystem Report 2025. It climbed seven spots to reach 14th place in the Global Start-up Ecosystem Ranking.
It was also the year when deep tech claimed its spotlight. Minister for IT-BT Priyank Kharge, who termed it the ‘deeptech-decade’, announced an investment pool of ₹600 crore for deep-tech start-ups in sectors such as AI, machine learning, quantum computing, advanced manufacturing and robotics. Announcements such as Fund of Funds during the 2025 Budget and the ₹1,000 crore LEAP programme to boost innovation beyond Bengaluru were other highlights.
The deep tech decade
“This year saw a fundamental pivot toward sustainability. Founders are tightening their operations and focusing on unit economics and real-world outcomes,” said Abhineet Kumar, CEO & co-founder at Rocket Health.
Indian deep tech start-ups attracted more than $1.5 billion in 2025, an increase from $1.17 billion the previous year, according to Tracxn.
Aridni Shah, cofounder and CEO at ImmunitoAI, pointed out that many VCs now have dedicated teams and theses to invest in deep-tech, which wasn’t the case a few years ago.
Strong performers
Following Operation Sindoor, conversations around the need for indigenous technology for national security and sovereign interests brought increased attention on sectors such as Aerospace and Defence.
“We’ve seen a lot of progress in space tech. A variety of start-ups are coming up in robotics, industrial automation, precision manufacturing, among others. Another area that is picking up, especially in Bengaluru, is quantum,” noted Madan Padaki, president at TiE Bangalore.
IP-led manufacturing, alternative fuel, transportation and consumption tech are also expected to fare well in the coming days according to experts.
Taslimarif Saiyed, CEO and director of C-CAMP, added that new start-ups are emerging in therapeutics, biotech, diagnostics, agriculture, digital health, and climate-tech.
Funding challenges
On the dimmer side of things, data from Tracxn showed a 37% dip in overall start-up funding in Bengaluru compared to 2024.
Investors, nevertheless, seem to be upbeat. Anurag Ramdasan, partner at 3one4 Capital, felt that the drop in funding in 2025 is inconsequential because in 2024 most of the funding went to a few start-ups that raised very large rounds.
According to him, what the ecosystem requires is enough start-ups having access to enough capital.
“There is still significant dry powder left despite everything that has played out this year. So, next year is going to be even bigger.”
Hopes for 2026
With 2026 around the corner, Mr. Bagaria foresees an increase in growth-stage and late-stage capital as businesses become more robust, while Mr. Ramadasan hopes to see big orders from the government for technologies developed by Indian start-ups.
Trisha Chatterjee, co-founder and CTO at ImmunitoAI, hopes for better industry-academia collaboration. The premium institutes in the State seem to be moving towards this. “This year, we onboarded several new start-ups and the portfolio now stands at 140+ deep science and tech incubatees,” noted Raj Waghray, chief executive at STEM cell, the deep-tech start-up incubator at FSID, IISc.
Published – December 28, 2025 07:59 pm IST
