Venture funding in artificial intelligence (AI) is entering a phase of concentration, with the capital increasingly flowing into a smaller set of large, infrastructure-led bets even as the overall deal activity remains broad-based at the early stage.
Data from Tracxn captures the shift starkly. Just 14 AI startups raised $674 million in the first quarter of 2026—almost matching the $888-million raised by 124 companies through all of 2025. Strip away the headline number, and the concentration becomes even clearer: a single company – Neysa — accounted for roughly $600 million of this year’s funding, backed by investors including Blackstone, Ontario Teachers’ Pension Plan and Nexus Venture Partners.
Infrastructure Over Applications
Neysa, which raised its Series B round in February, provides GPU compute, model deployment tools and cloud services for enterprises building AI models. The company has raised about $650 million across three rounds so far and is valued at $1.4 billion. Its scale and positioning underline a broader investor preference for picks and shovels plays, which means, platforms that enable the AI ecosystem rather than compete in crowded application layers.
“Investors are increasingly backing companies that enable others in a booming sector,” Abhishek Srivastava, general partner at Kae Capital, told FE during a recent interaction. He added that such models offer more durable demand visibility compared with end-user applications.
Beyond Neysa, funding activity has been concentrated in seed and Series A rounds across developer tooling, enterprise AI and emerging consumer use cases. Deccan AI raised $25 million in a round led by A91 Partners for its post-training data and evaluation platform, while Portkey secured $15 million from Elevation Capital to build AI gateway and governance tools.
An oversupply of capital at the early stage is also pushing up cheque sizes and valuations. The median round size has increased from $1.2 million last year to $4.25 million this year, though this is partly skewed by larger deals. More broadly, seed-stage AI startups are now raising $3-5 million rounds, compared with $1-2 million typically seen in non-AI sectors.
“AI seed is a different economics. There is ample capital supply, which creates some artificiality,” Srivastava said.
Third Wave
At the same time, emerging consumer use cases are beginning to influence funding decisions. A recent report by Bessemer Venture Partners said that India is entering a third wave of consumer technology, where AI is becoming the core layer shaping acquisition and retention, rather than an added feature.
This shift is visible in deal flow. Voice AI, regional language interfaces and AI-led services are drawing investor interest, particularly in India-specific contexts where global models may face limitations. Nurix, which raised $14.7 million, is building conversational AI tools for sales and support. Bolna focuses on voice AI agents for enterprise communication, while Ringg AI raised $5.5 million in a round led by Arkam Ventures for its voice-based automation platform.]
In AI-led services, Qure.AI secured a grant from the Gates Foundation for its medical imaging solutions, while Stepout raised $1.5 million to develop AI-driven football performance analytics.
The current funding cycle, therefore, reflects a mix of abundant early-stage capital and increasing concentration in a few large bets. Investors said the next phase will test whether these companies can justify elevated valuations as they scale, particularly as they move beyond early-stage funding into growth rounds.