The next VC playbook: over 50% to AI infra; climate tech rises and consumer holds steady

India’s venture capital (VC) ecosystem is entering a new phase of capital allocation. According to the India Venture Capital Report 2026 by Bain & Company in association with Indian Venture and Alternate Capital Association (IVCA), the VC and growth equity market maintained its upward momentum in 2025, reaching approximately $16 billion and marking its second consecutive year of growth.

Historically, capital has flowed into sectors such as SaaS, fintech, and consumer tech—albeit in a more measured environment. However, as artificial intelligence takes centre stage in 2026, investors are increasingly pivoting towards AI-led opportunities.

“50% of the VC capital will flow to AI infrastructure,” says Apoorva Ranjan Sharma, Co-founder of Venture Catalysts and 100Unicorns.

Speaking to Business Today, Sharma noted that India is on the cusp of an AI transformation, with little room for delay. In contrast, the US has spent over a decade building its AI ecosystem, led by companies such as OpenAI. A key focus area for 2026 and beyond, he emphasised, is AI infrastructure, spanning data infrastructure, data centres, and servers.

The underlying premise of AI, he explained, is fundamentally dependent on data, whether synthetic or real, driving the need for faster processing and expanded server capacity. “This makes AI infrastructure a huge opportunity. India is expected to become one of the biggest players globally in this space,” he added.

Aditya Singh, Co-founder and Partner at All In Capital echoes a similar view.  He notes that while consumer-led models have attracted significant capital over the past few years, monetisation and differentiation have become increasingly challenging. In contrast, sectors such as AI, deep tech, and infrastructure are building the foundational layers for the next decade of innovation. “These businesses may take longer to mature but have the potential to create larger, more durable outcomes,” he added.

“A significant portion of venture capital, nearly 60 to 70%, is flowing into AI-related opportunities,” Singh points out, distinguishing between core AI innovation and AI-led applications. While deep tech is gaining traction, it remains capital-intensive with longer gestation periods. SaaS is still relevant, with a shift towards AI-enabled models, while consumer and platform plays, especially commerce and quick commerce, continue to attract capital due to strong demand and faster scalability.

Beyond AI, Sharma pointed to climate tech as another emerging investment frontier. While the sector has been in focus for several years, large deal activity has remained limited. One of the recent exceptions is Varaha, a climate tech company enabling farmers to earn carbon credits, which raised $45 million in a Series A round.

Sharma believes this is set to change. He expects a mushrooming of climate-focused funds in India, mirroring the rise of AI-focused capital pools. Globally, he noted, venture capital tends to generate returns across three core sectors; deep tech, consumer tech, and sustainability, and India is likely to follow a similar trajectory.

On global LP sentiment, Singh says investors remain structurally bullish on India’s long-term growth story. However, near-term allocations are tempered by macro factors, especially currency depreciation, as dollar-based returns must factor in rupee weakness. This has led to some caution, though domestic capital and select global pools like endowments continue to sustain investment momentum.

Even as newer themes gain traction, consumer tech is expected to remain relevant within the broader VC playbook, continuing to attract steady capital alongside emerging sectors like AI infrastructure and climate tech.