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Why Deep Tech and Defence Startups Are Attracting Investor Interest in India
India’s venture story is undergoing a change in emphasis. For much of the last decade, capital flowed towards consumer internet and software platforms, where growth was quick and capital requirements were modest. Attention is now moving to companies built on proprietary science and engineering, and two areas in particular have come into focus: deep tech startups in India and the defence technology companies emerging alongside them. What is more consequential than any single funding round is the set of conditions that has formed around these sectors, from public policy to manufacturing volumes to export demand. A deeper base of founders and funding According to Tracxn, India is home to more than 8,800 deep tech startups in India, of which 1,821 have raised funding and seven have reached unicorn status. The proportion is instructive: a meaningful base of companies has already crossed the threshold from laboratory concept to institutional capital. Nasscom’s Indian Tech Start-up Report 2025 places total tech startup funding at USD 9.1 billion for 2025, an increase of 23 percent, with USD 2.3 billion directed to deep tech. Investors are evidently prepared to underwrite intellectual property and long development cycles alongside more familiar software models. The appeal is practical. Ventures built on patents, specialised research and difficult-to-replicate engineering acquire defensible positions once a product reaches the market, and the entry barriers that result can support durable businesses and returns over a longer horizon. Policy is building a floor of patient capital The Union Cabinet approved the Research Development and Innovation Scheme with a corpus of INR 1 lakh crore, providing long-term financing at low or nil interest rates to private sector research and making provision for a Deep-Tech Fund of Funds. For companies that need years rather than quarters to reach commercial scale, this establishes a supportive financing layer beneath the venture market. Defence innovation has a dedicated channel of its own. The iDEX scheme was approved with an outlay of INR 498.78 crore for 2021-22 to 2025-26, and the ADITI scheme with INR 750 crore for 2023-24 to 2025-26, both intended to bring startups into the development of technologies for the armed forces. Defence manufacturing is broadening its base India’s annual defence production reached a record INR 1.78 lakh crore in FY 2025-26, a rise of 15.6 percent over the previous year and 110 percent since FY 2020-21. Output of this scale generates steady demand for components, software, sensors and subsystems. The private sector contributed about 24 percent of that production, roughly INR 42,000 crore, up from 22 percent a year earlier. A growing private share leaves more room for defence startups in India to participate as suppliers, technology partners and system builders. The opportunity is broad. Modern defence platforms depend on electronics, drones, communication systems, advanced materials and software, and much of this work sits with specialised smaller firms. A startup that develops a reliable component or subsystem can become part of a long-running supply chain, where demand tends to recur rather than arrive as a one-off. Exports extend the addressable market Defence exports reached an all-time high of INR 38,424 crore in FY 2025-26, up 62.66 percent from INR 23,622 crore in the previous year, and Indian equipment now reaches more than 80 countries. Private companies accounted for INR 17,353 crore of that total. For early-stage companies, global demand offers a larger addressable market than domestic requirements alone, which matters when investors weigh long-term returns. Where the two sectors converge Many modern defence capabilities rest on deep technologies. AI-based surveillance, autonomous drones, secure communications, advanced sensors and space-based systems sit at the intersection of the two sectors, which means a single technology platform can often serve defence, aerospace and commercial customers. This dual-use character gives investors more than one route to revenue and reduces dependence on a single customer segment. Founders gain as well, since research undertaken for one application can carry across several markets, and funds with a long-term view have begun to study the two areas together. The road ahead The factors behind this interest are visible in the data. Funding is rising, policy has established a floor, production capacity is expanding and exports are opening larger markets. Technical depth and long-term demand, once treated as obstacles, are increasingly read as strengths, and that is why deep tech startups in India now receive sustained attention from investors. The same reasoning applies to defence startups in India, which benefit from government backing, wider private participation and global demand. Companies in both areas need time to test, certify and scale their products, and capital that remains invested for the full journey is best placed to support them. The coming years are likely to place these sectors at the centre of India’s innovation and investment story.
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Indian Capital, Indian Innovation: The Domestic Turn in Startup Investing
India’s alternative investment industry has reached a scale that is difficult to overstate. Alternative investment funds have grown into a USD 180 billion industry, compounding at 30.7 percent annually between fiscals 2015 and 2025. What is more consequential than the headline number, however, is the changing composition of the capital behind it. For the better part of a decade, Indian innovation was financed largely by foreign balance sheets. That dependency is now easing, and the shift in venture funding in India carries implications for founders and allocators alike. The domestic share has tipped past the halfway mark According to the third edition of No Ifs About AIFs, a benchmark-led study by Crisil Limited and Oister Global, SEBI data shows that domestic investor participation in Category I and Category II AIFs rose from 50.3 percent in March 2024 to 55.3 percent in September 2025, accompanied by an additional INR 1.14 lakh crore in inflows. The split is instructive: as of September 2025, Category I funds drew 73.1 percent of gross funds raised from domestic investors against 26.9 percent from foreign sources, while Category II funds stood at 53.0 percent domestic and 47.0 percent foreign. This mirrors a global pattern rather than diverging from it. United States state pension funds raised alternative asset allocations from 30 percent to 40 percent between June 2018 and June 2023, and the 2023 Fidelity Institutional Investor Study placed roughly 25 percent of US institutional portfolios in alternatives. India is following the same curve, from a lower base and at greater speed. Government capital is anchoring the asset class Government-backed institutions have supplied the foundation. The Small Industries Development Bank of India, the Self Reliant India Fund, the National Investment and Infrastructure Fund, the Ecosystem Development Fund, the National Bank for Agriculture and Rural Development, the Technology Development Board and the Biotechnology Industry Research Assistance Programme have collectively infused over INR 24,293 crore into AIFs. The policy pipeline extends further. The Union Budget 2026 announced a dedicated INR 10,000 crore fund for small and medium enterprises, alongside a top-up of INR 2,000 crore to the SRI Fund. The Union Budget 2025 had allocated INR 1,000 crore to the space economy, and the Department of Science and Technology launched the Research Development and Innovation Fund, allocated INR 1 lakh crore over six years with INR 20,000 crore earmarked for fiscal 2026 alone. Taken together, these commitments do more than add capital; they establish a floor of patient, long-horizon money beneath the domestic venture market, strengthening the base of venture funding in India. Family offices are stepping into venture Indian family offices have moved from opportunistic participation to considered allocation, and the depth already present in the market is best seen through the established names. PremjiInvest, the family office of Azim Premji, has backed approximately 51 startups, among them Mintifi, GIVA, Purplle and The Sleep Company, several of which have since become well-established ventures. Inc42 Media The character of this capital matters as much as its quantum. A family office carries a direct understanding of Indian consumer behaviour, market structure and the regulatory environment, and it operates without the compressed return horizon that governs other forms of institutional money. For an early-stage company, that combination translates into capital that can remain invested through a longer build cycle, accompanied by strategic guidance rather than capital alone. Founders are backing founders A parallel development is the emergence of the founder as an active angel investor. A generation of Indian entrepreneurs who built and scaled their own companies now maintains substantial early-stage portfolios, and their participation has become a recognisable feature of seed and pre-seed rounds. The scale is no longer marginal. Drawing on Tracxn data, Outlook Business reported that Kunal Shah, founder of CRED, backed 190 startups between 2021 and July 2026, with a broader portfolio approaching 300 lifetime investments spanning fintech, software-as-a-service, consumer internet and enterprise names such as Zetwerk, Shiprocket and BigBasket. He is one of many. Deep Bajaj, founder of Sirona, invested in approximately 20 startups in a single year across wealthtech, healthtech, petcare and wellness, while Mamaearth cofounder Ghazal Alagh has been an active angel investor alongside her cofounder Varun Alagh, and Unacademy cofounder Gaurav Munjal has built an early-stage portfolio of his own. Ritesh Malik, founder of Innov8, has invested in over 80 startups. Top Angel Investors India 2026: Founders Bag Big Wins +2 Several such investors have gone a step further, formalising their activity into structured family offices and micro funds with dedicated teams and defined mandates. Founder-led angel platforms have institutionalised in parallel; WeFounderCircle, a network of startup founders and angel investors backing early-stage companies, claims more than 150 investments to date across sectors, including Garuda Aerospace, Anveshan, Zypp, Pixxel and PeeSafe. Inc42 Media For early-stage startups, this capital is differentiated. A founder-investor has priced a product, managed a burn rate, navigated a difficult round, and hired a first sales leader. The resulting diligence is sharper, the post-investment support more operational, and the alignment more instinctive. Investor breadth has held up accordingly, with 1,108 unique investors participating in the ecosystem during the first half of 2026. Inc42 Media Alpha, diversification and a supportive exit market Underpinning all of the above is a straightforward portfolio calculation. HNIs, UHNIs and family offices are seeking superior risk-adjusted returns and reduced concentration risk as traditional instruments come under pressure from evolving macroeconomic conditions. Thematic and impact-oriented AIF strategies, particularly in technology and sustainability, allow capital to be aligned with specific mandates while pursuing enhanced returns. Exits have made that calculation credible. India’s startup ecosystem has created over 1.7 million direct jobs across fintech, healthtech, agritech and edtech, with more than 100 unicorns valued above USD 1 billion. IPO activity surged in fiscal 2024 with 209 companies going public, exceeding the combined total of fiscals 2022 and 2023. By the end of the first nine months of fiscal 2026, 261 IPOs had been launched, already surpassing the full-year total of 234 recorded in the preceding fiscal period. Improved
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What Is a SEBI Accredited Investor Certificate, and What Does It Take to Qualify?
Accreditation has become a term investors and wealth managers now need to understand in practical detail, not just recognise in passing. A SEBI accredited investor certificate is a formal recognition of an investor’s financial capacity, and it increasingly determines which investment opportunities an investor is even eligible to consider. This piece sets out what the certificate is, who issues it, exactly what it takes to qualify, and how SEBI’s most recent proposal could reshape the process. What the Certificate Actually Is An accredited investor certificate is a document issued by a SEBI-recognised accreditation agency confirming that an individual or entity meets specified income, net worth, or asset thresholds. It is not issued by SEBI directly. Instead, it is granted by accreditation agencies that are subsidiaries of stock exchanges and depositories, such as NSE, BSE, NSDL, and CDSL, operating under SEBI’s regulatory framework. The certificate itself carries a unique accreditation number, the applicant’s PAN, the name of the issuing agency, and a defined validity period. Holding this certificate is what allows an investor to be treated as an accredited investor under SEBI’s regulations, a status that can unlock relaxed disclosure norms, lower investment minimums, and greater flexibility in structuring terms across various SEBI-regulated investment products. Without the certificate, an investor is treated as a standard, non-accredited investor, regardless of their actual financial standing. Eligibility Criteria: The Financial Thresholds For an individual, Hindu Undivided Family, family trust, or sole proprietorship, eligibility is assessed against three alternative routes, and meeting any one of them is sufficient: An annual income of at least ₹2 crore; or A net worth of at least ₹7.5 crore, of which not less than ₹3.75 crore must be held in financial assets; or A combined test of an annual income of at least ₹1 crore together with a net worth of at least ₹5 crore, of which not less than ₹2.5 crore must be held in financial assets. For body corporates and trusts other than family trusts, the threshold is a net worth of at least ₹50 crore. Partnership firms are not assessed as a single entity. Each partner must independently meet the applicable individual criteria before the firm can be treated as accredited through that partner’s participation. Documents Required and How the Application Works The application is submitted online, directly through the portal of a SEBI-recognised accreditation agency, and an investor may choose whichever agency is most convenient, as there is no requirement to apply through a specific one. The typical documentation includes: PAN and a valid identity or address proof, such as an Aadhaar card or passport Income tax returns for the relevant preceding financial year or years, depending on the eligibility route being claimed A net worth certificate from a practising chartered accountant, generally required to be dated within six months of the application, along with the underlying working for how the net worth or liquid net worth has been calculated For body corporates, financial statements and income tax returns for the last three financial years, along with a statutory auditor’s certificate confirming net worth as on the date of application Once submitted, the accreditation agency verifies the application against the supporting documents and the applicant’s KYC records. With complete documentation, applications are typically processed within three to seven working days, after which the agency issues the certificate along with its unique accreditation number. Fees for processing are set by the individual accreditation agency and vary accordingly, so it is worth checking the current fee schedule on the chosen agency’s portal before applying. How Long the Certificate Lasts Validity is tied to how many years of financial data the applicant is able to demonstrate at the time of application. A certificate is generally valid for one year by default, extending to two years where the applicant meets the eligibility criteria based on the preceding financial year, and up to three years where the criteria are met across the preceding two financial years. Newly incorporated entities that meet the net worth criteria but lack financial history for a full preceding year are typically granted a two-year validity. Once a certificate lapses, the investor must reapply and requalify to retain accredited status. SEBI’s August 2026 Proposal: A New Route to Accreditation In a consultation paper released on 13 August 2026, SEBI proposed a fourth eligibility route based purely on securities market holdings, rather than income or net worth. Under the proposal, an individual holding at least ₹5 crore in eligible securities market assets, such as listed equity, mutual fund units, AIF units, REIT and InvIT units, and certain other holdings, would qualify as accredited without separately demonstrating income or net worth. The threshold proposed for body corporates under this route is ₹20 crore. SEBI estimates that this route alone could bring roughly 3.7 lakh additional investors into the accredited pool, a significant expansion from the 3,820 accredited investors recorded as of 31 July 2026. The same paper proposes simplifying verification further, allowing an eCAS statement from a depository, a recent broker statement, or a chartered accountant’s certificate to serve as proof under the new securities-assets route. It also proposes permitting investment managers to determine and record an investor’s accredited status directly during onboarding, as an alternative to routing every applicant through an external accreditation agency, along with recognising accreditation at the group-entity level across AIFs, SIFs, and PMS. These proposals were open for public comment until 3 September 2026, and none of them are in force yet. Investors should continue to rely on the existing criteria and process described above until SEBI notifies a final rule. Conclusion Accreditation is, at its core, a paperwork exercise with an outsized payoff. The eligibility bar is fixed and well defined, the documentation is standard financial proof most qualifying investors already have on hand, and the process runs entirely online through an agency of the investor’s choosing. What it unlocks in return, access to a widening set of SEBI-regulated products under relaxed norms, makes it worth completing well before a specific
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Why Private Markets Are Becoming India’s New Asset Class for Wealth Managers and Investors
India’s investment landscape is evolving. Investors are looking beyond the traditional mix of equities and fixed income to build portfolios that can withstand a decade of change, not merely a single market cycle. Private markets are at the center of that shift. This is no longer a fringe allocation; it is beginning to shape how serious, long-term capital is deployed. Here is what is driving that shift, how private market investing works, and what it means for wealth managers building portfolios for the years ahead. Understanding Private Markets Private markets comprise investments in companies that have not listed on a public exchange. There is no daily ticker and no crowd of traders reacting to headlines. Value here is derived from what the business actually delivers, quarter over quarter, year over year. The core asset classes are private equity, venture capital, private credit, and infrastructure or real assets, and each deploys capital differently. What unites them is a common premise: capital goes into building an enterprise, not into trading a claim on one. This is the essential appeal for allocators: the ability to participate in a company’s growth well before it ever considers going public. Factors Driving the Growth of Private Markets in India A Growing Innovation Economy India continues to produce privately held businesses at pace, across fintech, SaaS, AI, and deep tech. According to Bain & Company’s India Venture Capital Report 2026, India’s venture capital and growth equity market reached approximately USD 16 billion in 2025, rising 1.2x year over year and marking its second consecutive year of growth. Larger funding rounds also returned, with deals above USD 250 million doubling year over year. Each of these rounds reflects a company choosing to remain private for longer, part of a broader pattern of start-ups becoming institution-ready earlier in their lifecycle. This is precisely the window that private markets are built to capture. Greater Focus on Portfolio Diversification Public markets tend to move together, particularly when sentiment shifts quickly. Private markets do not follow the same rhythm, since returns are tied to the performance of individual companies rather than the broader index. For portfolios that have leaned heavily on listed securities, this distinction is meaningful, and it is one reason the asset class is often discussed in terms of stronger risk-adjusted returns rather than simply higher returns. A Long-Term Investment Perspective Investing in a company’s growth phase is fundamentally different from buying its stock once it has already scaled and listed. It requires patience and a longer time horizon, and it aligns naturally with investors thinking in years rather than quarters. It also mirrors how founders themselves are building today, with many now prioritizing profitability over growth at any cost. A Maturing Investment Ecosystem The infrastructure supporting private capital in India has advanced considerably. Investors and wealth managers alike understand this space far better than they did five years ago, and the regulatory framework has kept pace, turning what was once a difficult market to access into one that is far more structured. The Role of Alternative Investment Funds (AIFs) An Alternative Investment Fund (AIF) is a professionally managed, pooled investment vehicle that allows investors to gain exposure to private markets without having to source and diligence individual deals themselves. AIFs are registered with and regulated by the Securities and Exchange Board of India (SEBI) under the SEBI (Alternative Investment Funds) Regulations, 2012, which brings structure and oversight to a category of investing that could otherwise be opaque. For a wealth manager, this changes what is possible: private market exposure can be offered through a properly governed channel, expanding the opportunity set available to client portfolios well beyond conventional equity and debt instruments. Why Wealth Managers Are Paying Greater Attention to Private Markets Clients are increasingly asking for more diversified portfolios, and private markets respond directly to that demand. They open access to a wider set of opportunities, including high-growth companies that are simply not available through public markets. Part of the appeal also lies in alpha generation, the portion of return that comes from a manager’s skill in sourcing, building, and exiting a company, rather than from a rising market lifting all portfolios together. Within a portfolio built to endure, private markets sit alongside traditional asset classes rather than competing with them, contributing a form of growth exposure that listed markets alone cannot offer. Key Considerations Before Investing in Private Markets Time horizon is the first consideration. Private market investments generally require a longer holding period than listed instruments. Liquidity follows closely, since capital committed here cannot be withdrawn on short notice, which means timing requires careful upfront planning. Risk and return also vary meaningfully across asset classes: private credit tends to be steadier and income-focused, while venture capital carries higher growth potential alongside higher variance. Understanding this distinction is what allows a recommendation to genuinely fit a client’s objectives. None of this replaces sound professional guidance informed, well-structured decisions remain the foundation of any private market allocation. In Summary Private markets are not a passing trend in India; they are becoming a durable part of the investment landscape. As the country’s innovation economy continues to expand and its regulatory framework continues to mature, private market investing is emerging as an increasingly relevant asset class for long-term investors. For wealth managers, this represents both an opportunity and a responsibility to understand the asset class thoroughly and to guide clients toward well-structured, professionally managed access points such as SEBI-registered AIFs. As India’s economy continues to evolve, so too does the range of opportunities available to those prepared to look beyond public markets.
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AIFs Explained: A Wealth Manager’s Guide to Alternative Investment Funds
India’s investment landscape is evolving, and the shift is not confined to India alone. Private markets are increasingly central to wealth creation globally. According to Apollo Academy and S&P Capital IQ, roughly 87% of U.S. companies with revenue exceeding USD 100 million are privately held. India is following a similar trajectory. Big companies spend significant years building scale as private companies before any public listing. This is where the real alpha generation opportunity now lies: in private markets, well before a company ever reaches the public exchange. Why Private Markets Are Becoming Central to Modern Investing Private markets encompass equity, debt, and credit instruments issued by companies that remain unlisted, often deliberately, for extended periods of their growth journey. India’s private markets are expanding rapidly: assets under management are projected to nearly double from USD 136 billion in December 2024 to USD 247 billion by 2029, a CAGR of over 13% (CareEdge Advisory, Treelife). More founders are choosing to stay private for longer, raising larger rounds well ahead of any IPO, and reaching institutional readiness earlier in their lifecycle than previous generations of companies. This means the pool of high-quality unlisted businesses keeps growing, expanding the opportunity set available to wealth managers on behalf of their clients. This is precisely where Alternative Investment Funds (AIFs) come in. Understanding Alternative Investment Funds An Alternative Investment Fund is a privately pooled investment vehicle, typically structured as a trust, company, or LLP, that invests according to a defined strategy on behalf of its investors. AIFs in India are regulated by SEBI under the SEBI (Alternative Investment Funds) Regulations, 2012, and are classified into three categories based on their investment strategy and risk profile. What Wealth Managers Should Consider Before Allocating to AIFs For wealth managers, AIFs offer a genuine avenue for portfolio diversification and can improve risk-adjusted returns when allocated thoughtfully within a client’s broader portfolio. Exposure to private, high-growth startups through venture-focused AIFs can help generate strong outcomes for clients seeking long-term capital appreciation, while credit-oriented AIFs can offer attractive risk-adjusted yields for clients prioritizing income stability. That said, AIFs come with considerations that differ meaningfully from traditional listed products, including longer lock-in periods, lower liquidity, and higher minimum ticket sizes (currently ₹1 crore for most categories). Final Thoughts As India’s private markets continue to mature, Alternative Investment Funds are becoming less of a niche allocation and more of a core building block in well-constructed portfolios. For wealth managers, understanding the nuances across AIF categories and matching the right strategy to the right client will be key to unlocking the next phase of wealth creation. Explore how thoughtfully curated private market opportunities can strengthen your clients’ long-term portfolios: info@finvolve.co Disclaimer: The views expressed herein are intended solely to provide general information on Alternative Investment Funds and should not be interpreted as investment advice or a recommendation. Investment decisions should be based on individual objectives, risk appetite, and independent professional advice.
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The Emergence of Institution-Ready Startups in India
Foreign capital’s approach to Indian startups has changed. What was once a smaller, more cautious allocation is now a core part of how global investors approach India. Limited partners, sovereign funds, and pension capital are building structured, long-term positions here, not one-off commitments. The real shift isn’t just that more money is flowing in. It’s that the startups receiving it look different now: built for institutional scrutiny from the start, not adjusted to meet it later. This is the clearest sign yet that India’s startup ecosystem is entering a new, more mature phase. Foreign Capital Is Making a Structural Commitment Even during the times when investment activity in Asia-Pacific’s private market contracted, India emerged as a relative outperformer amongst other nations. As per the recent stats (McKinsey-IVCA LP Survey), while private capital investment activities in India slowed since its peak of $74 Bn in 2021, the country has captured a larger share of Asia-Pacific private investments, increasing 12% in 2015-2019 to 21% in 2020-2024. Large global funds and sovereign wealth funds kept deepening their exposure here even while rebalancing elsewhere in the world. (EY-IVCA, via Entrepreneur India) That kind of permanence tells that global investors now see India as a long-term part of their core portfolio, not a once-in-a-while addition. Allocation decisions like this take years to plan and even longer to unwind, which is exactly why this shift carries so much weight. It showcases confidence that extends well beyond a single fundraising cycle or market mood. Deeptech Is Where the Funding Actually Shows Up According to the stats, Deeptech funding in India jumped 37% in 2025 to $2.3 billion, with AI alone accounting for 91% of that capital. (Nasscom-Zinnov Indian Tech Start-up Report 2025) Capital is moving toward startups solving harder, more technical problems rather than just scaling familiar consumer apps. The government has reinforced this directly, with the Cabinet approving a ₹10,000 crore (roughly $1.1 billion) Startup India Fund of Funds 2.0 in February 2026, aimed squarely at deep tech and advanced manufacturing through private VCs. (MLQ News) Private and public capital are now converging on the same idea: India’s next category leaders will be built on real technical depth, not download numbers. This matters because deeptech businesses typically take longer to mature and demand more patient capital, so the willingness of investors to commit early is itself a vote of confidence in where India’s research and engineering talent is headed. Why Startups Are Suddenly Getting Serious Capital like this doesn’t show up without strings attached. According to McKinsey-IVCA survey, Global LPs in late 2025 consistently favoured sectors with cleaner governance and clearer execution visibility. (McKinsey-IVCA LP Survey) Investors today are being far more selective about who they back, even as the dollars committed stay strong. That selectivity is forcing founders to rethink what “fundraising-ready” actually means. Audited financials, real board governance, and predictable reporting used to be formalities tacked onto a pitch deck. Now they’re table stakes, because that is precisely what global capital expects before it commits. Founders who once treated compliance as a box to tick before a funding round are now building it into the company from day one, since retrofitting governance after the fact is far harder, and far less convincing to a serious investor, than having it baked in from the start. Who’s Actually Funding This Shift This is also reshaping who’s writing the cheques, and through what structures. Indian HNIs and family offices are increasingly moving alongside foreign institutions into structured vehicles, a trend we’ve covered in more depth in our piece on HNI allocation into venture capital. GIFT City has become a major enabler of this convergence. Its IFSC-based funds had pulled in $26.3 billion in commitments as of September 2025, with marquee global names like GIC, ADIA, and Blackstone among those routing capital through the platform. (Chambers and Partners, Investment Funds 2026) The appeal is structural: foreign capital can flow in through FDI, FPI, or FVCI routes, with pass-through taxation and a single regulator handling approvals instead of the patchwork that used to apply. (Treelife, GIFT City AIF Guide) Domestic and global wealth are no longer separate tracks. They are increasingly moving through the same structured channels, toward the same kind of startup, which means the gap between a domestic family office and a global sovereign fund’s expectations is narrowing fast. Where the Next Wave of Capital Will Concentrate The next cycle already has a shape to it. Investors are pointing to AI infrastructure, data centres, servers, and compute capacity, as the area is set to absorb the largest share of venture dollars going forward, with climate-tech expected to follow a similar trajectory as dedicated funds emerge around it. (Business Today, citing Bain & Company) For founders building in these spaces, that is a clear signal of where the deepest pools of capital are likely to form next, and an early indication of which sectors will define India’s next wave of category leaders. The Way Forward India isn’t just producing startups anymore. It’s producing institutions-in-waiting: audited, governed, and built for capital that wants to stay a decade, not a cycle. Foreign LPs aren’t showing up for low valuations. They’re showing up because enough Indian startups can finally meet them at their own standard, and that shift in expectations is reshaping what it means to build a startup in India today.
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The New Startup Playbook: Profitability Over Rapid Expansion in India
Venture capital in India once relied on one unforgiving maxim: growth at all costs. Every founder chased aggressive fundraising, scaled quickly, captured market share, and set the profitability path for later. Vanity metrics app downloads, customer acquisition numbers, valuation milestones were the currency of success. Till 2024, becoming a unicorn was the benchmark. Today, a new startup playbook is being rewritten. There was a time when the last slides of pitch decks demonstrated the “path to profitability” as an afterthought. However, a new generation of founders, investors, and startup ecosystems is changing that narrative. The conversation has shifted from how fast you can grow to how sustainably you can operate. India’s startup ecosystem is now entering a phase of maturity, where strong fundamentals are beginning to outweigh vanity metrics and the numbers are starting to reflect it.There was a time when the last slides of pitch decks demonstrated the “path to profitability” as an afterthought. However, a new generation of founders, investors, and startup ecosystems is changing that narrative. The conversation has shifted from how fast you can grow to how sustainably you can operate. India’s startup ecosystem is now entering a phase of maturity, where strong fundamentals are beginning to outweigh vanity metrics and the numbers are starting to reflect it. Biggest venture capital firms are now focusing more on startups with sustainable growth models and long-term profitability. As a result, founders are prioritizing financial discipline, operational efficiency, and scalable business strategies from the early stages itself. The End of Growth at Any Cost The funding frenzy between 2018 and 2021 was the peak of the old playbook. What followed was a hard correction. According to Tracxn’s India Tech Annual Funding Report 2025, Indian tech startups raised $10.5 billion in 2025 down 17% from $12.7 billion in 2024. More telling than the dollar figure, however, is the deal activity behind it. The number of startup funding rounds fell by nearly 39% from a year earlier, to just 1,518 deals. Investors are not simply writing smaller cheques they are writing far fewer of them. This is not a funding crisis. It is a capital reset. Startups are realising that growth without economic viability builds fragile businesses. Healthy cash flow and repeatable revenue models are no longer aspirational they are the entry requirement. The Rise of Capital Efficiency Efficient use of capital has become one of the strongest indicators of startup health. Earlier, startups measured themselves by how fast they were burning fuel. Today, the questions have changed: How much revenue does each customer generate? What does it cost to acquire them? How quickly does the business reach profitability? According to Inc42’s Annual Indian Startup Trends Report 2025, over one-third of Indian startups chose profitability and runway extension over fundraising in 2025, reframing capital discipline as a competitive advantage rather than a slowdown signal. This is a fundamental behavioural shift not a response to market pressure, but a deliberate strategic choice by founders who have internalised that undisciplined growth is the real risk. Many startups are significantly reducing operational expenses and optimising teams to build profitable customer segments instead of pursuing unchecked market expansion. The result is a healthier, more measured approach to growth. Venture Capital Firms Changing Their Investment Lens Investors are recreating their strategies in real time. Rather than funding growth stories anchored in future possibilities, they are backing startups that can demonstrate product-market fit, revenue visibility, and strong unit economics today. The stage-wise funding data from Tracxn makes this shift explicit. Seed-stage startups raised $1.1 billion in 2025 a 30% decline from 2024. Late-stage funding dropped to $5.5 billion, down 26% from the prior year. Early-stage funding, however, proved resilient rising 7% year-on-year to $3.9 billion. The divergence is deliberate: investors are trimming exposure to unproven bets at both ends of the spectrum, while doubling down on companies that have demonstrated real traction. Capital is not disappearing; it is concentrating around businesses with clearer paths to profitability and stronger execution capabilities. The Unicorn: A New Definition of Success The traditional unicorn model measured success through valuation alone — crossing the billion-dollar mark regardless of profitability. That definition is under revision. In 2025, six startups entered the unicorn club, which have cumulatively raised more than $115 billion and command a combined valuation of over $366 billion. Notably, many of 2025’s new unicorns had already turned profitable before reaching the milestone. The path to a billion-dollar valuation is increasingly being built on strong margins, sustainable customer retention, operational efficiency, and responsible scaling rather than aggressive fundraising. As Inc42 noted, what was once a unicorn frenzy has now become a more measured climb, as investors have become more selective resulting in founders doubling down on fundamentals. Some startups may reach billion-dollar valuations; others may not. But profitability is what makes a startup resilient across uncertain economic cycles. Sector Trends Reinforcing the Shift Investors are not withdrawing from innovation — they are redirecting it. Capital is flowing toward startups that solve structural problems and demonstrate practical business value. Start-up funding for business is now increasingly supporting companies that focus on sustainable innovation and scalable growth models. Investor interest has increasingly shifted towards AI, deep tech, and other long-term innovation-led sectors, while late-stage private funding remained under pressure. Industry reports from Tracxn and others suggest that 2025 functioned as a reset year for India’s startup ecosystem not a collapse. Funding totals were lower than in previous cycles, but the quality of capital deployment improved, with investors backing companies with stable revenue prospects and sound unit economics. Final Thoughts The Indian startup ecosystem is reaching the end of unchecked ambition. The new playbook rewards disciplined founders who understand that sustainable businesses outlast temporary hype. Funding rounds, unicorn status, and expansion plans still matter but they are no longer the only indicators of success.The ecosystem is not slowing down. It is growing up. And the founders who treat financial discipline not as a constraint, but as their core strategy, are the ones investors are backing in this
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BY: admin
Are Indian Startups Finally Growing Up?
Ever since its emergence, the Indian startup ecosystem has been evolving across multiple layers. Capital continuously flows into new ideas, founders push innovation boundaries, and global players tighten their grip on what comes next. For the longest time, the ecosystem operated on one singular rule: growth at speed and at any cost — burning cash, capturing market share, and figuring out profits later. However, that era has finally come to an end, and the numbers prove it. Today, India stands as the world’s third-largest startup ecosystem, with over 2.07 lakh DPIIT-recognised startups as of December 31, 2025, up from a mere 502 in 2016 [1]. The sheer scale of this growth masks a far more important transformation happening beneath the surface: founders are no longer chasing valuation headlines or unicorn status. They are transitioning from speed-growth formulas to building business models that can last. This structural shift is redefining how founders raise capital, how multi-stage VC funds in India deploy it, and how the ecosystem matures as a whole. It is, in many ways, India’s startup ecosystem finally growing up. The Profitability Turn Is Real The financials tell a starkly different story about the ecosystem. In FY25, 60 out of 117 tracked new-age tech companies turned profitable, collectively posting a net profit of INR 13,487 crore [2]. This is a stark contrast to just two years prior, when the same cohort was haemorrhaging capital with losses running into tens of thousands of crore. Revenue growth was equally impressive. These startups collectively posted operating revenue of INR 2.87 lakh crore — a 20.5% jump year-on-year [2]. This is not a statistical aberration; it is the result of founders making hard choices — rationalising cash burn, fixing unit economics, and choosing sustainability over vanity metrics. Financial Discipline Is the New Disruption A cultural change is underway. Founders are now treating cash as a limited resource rather than a freely available growth lever. The metrics once reserved for investor boardrooms customer acquisition cost, lifetime value, gross margin, and payback period have become part of daily decision-making. Which channels to invest in, which geographies to expand to, which product lines to retain: these decisions are now driven by data, not ambition alone. In the present funding landscape, capital has not dried up — it has simply become more discerning. In 2025, seed stage funding recorded a 7% year-on-year jump to $3.9 billion, even as late-stage funding fell 26% to $5.5 billion. This divergence reflects a meaningful shift: investors are increasingly confident backing seed stage founders who demonstrate traction and discipline, while applying far greater scrutiny to companies seeking large growth rounds without proven economics. This recalibration is visible even at the top of the pyramid. India today is home to 127 unicorns that have cumulatively raised over $117 billion and command a combined valuation exceeding $389 billion [4]. Yet the pace of minting new unicorns has deliberately slowed — from a record 45 in 2021 to just six in 2025 [4] signalling that the era of valuation inflation is giving way to genuine value creation. This is precisely where seed stage funding in India plays a more strategic role than ever before. Seed stage capital is the stage where financial habits form; it can no longer be considered merely a bridge to the first institutional round. Early-stage investors now look for founders who understand their cost structures from day one and can articulate a clear path to positive unit economics. On the other end of the spectrum, the expansion of multi-stage VC funds in India validates the same thesis at scale backing companies from Seed stage through to IPO, and uniquely positioned to identify reward-based opportunities early. The IPO Pipeline Story Public markets have become one of the most compelling external validations of this shift. In 2025, 18 startup IPOs raised INR 41,248 crore ($4.5 billion) — the highest count on record and a 42% surge over 2024 [5]. Companies listed with audited financials, robust governance disclosures, and credible paths to profitability — a world away from the IPO frenzy of 2021, when valuations were driven more by narrative than by numbers. Notable public market debuts in 2025 included Swiggy, Ather Energy and Groww each signalling a shift from private valuation hype to public-market accountability. Complementing the IPO surge, M&A activity reached a new high in 2025 with over 140 deals — nearly double the number recorded in 2024 [3]. This uptick in mergers and acquisitions signals deeper exit opportunities for investors and reflects a maturing ecosystem where strategic consolidation is increasingly preferred over perpetual hyper-growth. The Key Takeaway India’s startup ecosystem is entering its maturity phase, and the data makes this undeniable. Founders are operating in an era of growth backed by sustainability. Investors are writing larger cheques from seed stage to multi-stage growth but only for businesses that have internalised financial discipline as a core value, not an afterthought. The trajectory is clear: with over 2.23 lakh recognised startups as of March 2026 [7], a record IPO year. India is no longer simply a large startup market it is becoming a disciplined one. The competitive edge in this next chapter belongs to founders who treat financial discipline not as a constraint, but as their most durable advantage. References [1] The Tribune / ANI — Startup India recognises 2.07 lakh ventures, 21.9 lakh jobs created (February 2026) [2] Inc42 — FY25 Financial Tracker: Financial Performance of Indian Startups [4] Inc42 — Indian Unicorn Tracker: Funding, Investors, Revenue and More [5] India Tech Desk — 2.06L Indian Startups, But Investors Fled: Here’s Why (January 2026) [7] EduNovations / Current Affairs — Startup India FY26: 55,200 Startups Recognised, Highest Ever Growth (March 2026)
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BY: admin
Why Indian HNIs Are Expanding Their Allocation Beyond Traditional Assets into Venture Capital
For years, Indian wealth has largely flowed into traditional asset classes, public markets, real estate and gold. That allocation strategy is now beginning to change. High-net-worth individuals (HNIs) and family offices are moving beyond conventional instruments and allocating capital to private markets. According to a report published by IBEF, nearly 30% of new HNIs owe their wealth to the tech and start-up sectors, while manufacturing and real estate contribute 21% and 15%, respectively. Additionally, the report features that India’s affluent population is increasingly diversifying its investments, with 32% allocation to real estate and 20% to private equity and start-ups, focusing on AI, blockchain and cleantech. This demonstrates venture capital, once considered a niche exposure, is becoming a more defined part of wealth strategies. This is not a short-term shift. It is a deeper change in how Indian investors approach long-term value creation. Industry insights increasingly indicate that Indian HNIs are raising their exposure to alternative assets, with venture capital and private equity becoming a more structured component of wealth portfolios rather than opportunistic bets. A New Allocation Mindset Is Emerging HNIs no longer approach venture capital as opportunistic exposure. They are treating it as a strategic allocation. This shift is driven by a clearer understanding of how value is created in private markets: As a result, investors are aligning capital with longer investment horizons and multi-cycle outcomes. This marks a clear departure from return expectations shaped by public markets. For many, this also means building access to the biggest venture capital firms and platforms that enable disciplined participation in private market investing. India’s Startup Ecosystem Has Reached Scale This shift in mindset closely tracks the evolution of India’s startup ecosystem. India is now the third-largest startup ecosystem globally, with over 110 unicorns, according to the Hurun Report. More importantly, the ecosystem is no longer defined by isolated success stories. A capital unicorn ecosystem is emerging, with companies that continue to attract capital, scale sustainably, and build long-term investor confidence. This evolution reflects: For investors, this creates greater visibility into long-term outcomes. Capital Is Following Conviction As the ecosystem matures, capital allocation is becoming more intentional. According to Bain & Company, India recorded over $25 billion in venture capital investments in peak years such as 2021, and continues to remain among the most active markets globally by deal volume. At the same time, data from Preqin highlights a steady increase in allocation toward alternative assets, including private equity and venture capital investment. For Indian HNIs, this translates into: The focus is no longer only on when to enter. It is on how to position capital and where to build access. From Participation to Strategic Exposure Venture capital no longer sits at the edge of wealth strategies. It is becoming part of the core allocation framework. This shift is supported by structural factors: These drivers are creating a more predictable environment for long-term investing. As a result, more HNIs are choosing to invest in startups through structured vehicles and curated platforms rather than relying on sporadic, high-risk exposure. Where the Next Wave of Value Will Emerge As capital becomes more patient and targeted, value creation will concentrate within a smaller set of companies. The next generation of category leaders is likely to emerge from: These sectors demand long-term capital and deep expertise, but they also offer the potential for outsized outcomes. A Market in Transition This is not just a shift in participation. It is a shift in mindset. Indian capital is moving from opportunistic investing to structured, long-term allocation. The market is evolving from narrative-driven growth to fundamentals-led scaling, where repeatability, execution and capital efficiency matter more than hype. In such phases, early clarity often translates into long-term advantage. The Way Forward For Indian HNIs, venture capital is no longer a peripheral bet. It is becoming a core part of how wealth participates in growth. The opportunity is not just about investing in startups. It is about participating in the creation of category-defining businesses and aligning capital with long-term value creation. Because in markets like India, value is not created evenly. It is built early, scaled over time, and captured by those who position themselves ahead of the curve.
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BY: admin
The Institutionalization of Indian VC: How the Asset Class Has Matured from Cheque-Writers to Category-Builders
For years, investors in India asked a simple question: Who will write the first cheque? Today, they ask a more important question: who will build the category? This shift clearly shows how every venture capital firm in India has evolved. Over the past 15 years, investors have moved from opportunistic bets to structured, thesis-driven strategies. They no longer just fund companies; they actively shape markets. From Early Bets to a Structured Ecosystem In the late 2000s and early 2010s, investors backed the first wave of venture capital startups in India and helped build the startup ecosystem from the ground up. At that time, venture capital investments filled a critical gap. Investors took risks on first-time founders, supported untested ideas, and created early success stories. Capital remained limited, exits felt uncertain and founders learned through experience. In that environment, a VC fund created value simply by moving quickly and writing the first cheque. Today, the ecosystem looks very different. Founders bring more experience as markets mature and capital flows more freely. Because of this, writing a cheque no longer sets investors apart. Now, investors create value through what they do after the investment. They guide strategy, support hiring, open networks and help companies scale. This shift clearly separates average investors from the top venture capital firms. The Shift Towards Thesis-Driven Investing Investors no longer wait for opportunities to appear; they define where opportunities will emerge. Today, every serious VC fund builds its strategy around a clear thesis. Investors focus on specific sectors, develop deep expertise and make more informed decisions. For example, fintech investors understand regulatory changes and financial behavior. SaaS investors build companies for global markets from day one. Climate and deep-tech investors focus on long-term structural shifts. This approach reflects intentional strategy, not random diversification. Generalist investors compete on access, but specialists compete on insight, and insight gives them a stronger edge over time. Beyond Capital: Building the Operating Layer Modern investors do far more than provide capital. A strong venture capital firm in India actively supports its portfolio companies at every stage. Leading funds help founders find the right talent, refine go-to-market strategies, build partnerships and raise follow-on capital. They treat these capabilities as core offerings, not optional add-ons. As a result, founders now choose investors based on capability, not just capital. In this environment, even the biggest venture capital firms cannot rely on brand or size alone. They must consistently deliver value beyond funding to remain relevant. The Growing Role of Global and Corporate Capital Global investors now play a significant role in shaping venture capital investments in India. Sovereign wealth funds, pension funds, endowments and family offices actively back Indian funds and bring greater discipline to the ecosystem. These investors demand stronger governance, clearer accountability and long-term performance. Their participation has made the ecosystem more structured and predictable. At the same time, corporate venture capital has gained momentum. Large companies now invest in startups to drive innovation and stay competitive. This trend creates new opportunities for founders and strengthens the overall funding landscape. Together, these changes are positioning India as a credible and mature venture market. What This Means for Founders Founders now operate in a more competitive and demanding environment. They can access more capital, but they must meet higher expectations. To raise funding from top venture capital firms, founders must present clear market positioning, scalable business models and strong execution capabilities. Investors expect clarity, discipline, and long-term vision. In return, founders gain more than capital. They gain strategic partners who actively support growth, solve challenges and open doors to new opportunities. From Funding Companies to Building Categories Investors in India have started to think beyond individual companies. They now focus on building entire categories. They identify emerging trends early, back founders who can define markets and commit to long-term value creation. This approach reflects a deeper shift in how venture capital investments work today. Not every company succeeds, but category leaders shape industries. The best VC funds focus on finding and supporting those leaders. A Market That Has Come of Age Indian venture capital is evolving into a structured and disciplined ecosystem. Investors have moved from simple cheque-writing to building scalable platforms that support long-term growth. This evolution has also attracted more interest from those looking to invest in venture capital funds India, further strengthening the ecosystem. Today, Indian VC stands as a serious and globally connected asset class. The Takeaway The evolution of venture capital funds in India reflects a broader shift in the startup ecosystem. Investors are moving from fragmented, reactive investing to more structured, intentional capital allocation. Now, the key question is not whether India can build successful startups. The question is whether investors can consistently back companies that define categories. Because while capital drives growth, category leadership defines long-term impact. As this asset class becomes more institutional and competitive, access also becomes more critical. Multi-stage VC funds like Finvolve (Sebi-registered) are helping wealth managers invest in venture capital funds India through more structured and curated pathways, making it easier to participate in this evolving ecosystem with the right level of discipline and insight.
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