BY: admin
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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BY: admin
For a long time, enterprise software grew by adding more tools. Sales teams used CRMs, marketing relied on analytics dashboards, support teams worked through ticketing systems, and finance departments managed operations with accounting software. Slowly, companies built complex SaaS stacks just to keep everyday workflows running. AI agents are starting to change that reality. These systems can analyze data and execute tasks across multiple platforms autonomously. Instead of employees switching between dashboards, AI agents can automatically coordinate entire workflows. For founders and any venture capital firm in India looking at early-stage B2B startups, the bigger opportunity may not be building another SaaS tool, but building the intelligence that connects them all. The Rise of AI in Business Artificial intelligence is no longer a futuristic concept for businesses. It is quickly becoming a core part of how organizations operate. Companies across industries are increasingly integrating AI into their workflows to improve efficiency and decision-making. According to research by Bain & Co., nearly 87% of global enterprises are already developing, piloting, or deploying generative AI technologies. This rapid adoption shows how quickly companies are integrating AI into everyday business processes. The reason behind this shift is simple: productivity. Agentic AI takes this one step further. Unlike traditional AI tools that simply generate outputs or provide recommendations, AI agents can actually take actions and execute multi-step workflows. For instance, an AI sales assistant could identify new leads, gather customer data, draft outreach emails, schedule meetings, and update CRM records, without requiring manual input from a sales representative. How AI Agents Are Compressing the SaaS Stack Enterprise software has traditionally grown by adding layers of tools. Each new workflow introduced another SaaS platform, from CRM systems and analytics tools to project management and customer support platforms. AI agents are beginning to challenge this model. Instead of people operating software, intelligent systems can now coordinate workflows across applications. A single instruction could trigger multiple actions, such as analyzing sales data, identifying leads, generating outreach emails, and updating CRM records, all within one automated process. Research from Gartner suggests that automation and AI-driven decision-making are becoming central to enterprise strategy. As these systems mature, companies may need fewer standalone tools, leading to what analysts describe as SaaS stack compression. A New Structure for Enterprise Technology As AI agents become more capable, analysts believe the future enterprise technology stack will evolve into three key layers: 1. Systems of Record: These platforms store essential business data such as financial records, operational metrics, and customer information. They remain critical because they contain the proprietary data that companies rely on. 2. AI Agent Platforms: This layer analyzes data and executes workflows across multiple applications. AI agents can coordinate tasks, automate processes, and connect different systems through APIs. 3. Natural Language Interfaces: At the top of the stack are conversational interfaces where users simply describe what they want to achieve. Instead of navigating complex dashboards, a manager might ask the system to generate a revenue report or identify growth opportunities. Together, these layers represent a major shift in enterprise technology, from managing software tools to managing outcomes produced by intelligent systems. Why This Matters for Indian Startup Investors India has already established itself as a global hub for SaaS innovation, with several startups building enterprise products used by businesses worldwide. However, the rise of AI agents is opening a new frontier for founders. Instead of creating incremental improvements to existing SaaS tools, startups now have the opportunity to rethink entire business workflows, building AI-native platforms that can automate processes that once required multiple tools and teams. For any venture capital firm in India, this shift changes how startups may be evaluated. Investors are increasingly looking for companies that automate end-to-end workflows, leverage proprietary datasets to enhance AI performance and integrate deeply across enterprise systems. Startups capable of combining these elements are more likely to attract early-stage startup funding in India, as investors search for businesses building the next generation of enterprise technology. The Way Forward The shift toward AI agents is already changing how enterprises operate and it will reshape how startups build and scale. Instead of adding more tools, founders are now designing systems that take ownership of entire workflows. This shift forces investors to rethink what defines a strong B2B company. The next generation of startups will not win by offering better dashboards, but by replacing them altogether. Startups that combine automation, proprietary data and deep system integration will set the new standard for enterprise software and attract early-stage startup funding in India.
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BY: admin
India’s startup landscape is entering what many investors now call its second startup decade. The first phase, roughly between 2014 and 2022, was defined by rapid expansion, aggressive funding and the race to build the next unicorn business. The capital flowed towards startups chasing growth and scale. However, investors are shifting toward maturity and focusing more on technology, AI and startups with sustainable growth models over high-risk early ventures. Sustainability, profitability and long-term value creation today matter just as much as valuation. The numbers show how far the ecosystem has come. India now has over 1.4 lakh recognized startups and more than 110 unicorn businesses, making it the third-largest startup ecosystem in the world. Yet the real story of this decade is not just scale; it is the emergence of a more mature, resilient startup ecosystem built for long-term growth. The First Decade Was About Speed The first decade of India’s startup boom was defined by one word i.e. Speed. Venture capital flowed aggressively into the ecosystem, and startups raced to capture markets before competitors could. Growth often took priority over profitability, and the dominant playbook was simple: build quickly, scale rapidly and raise successive funding rounds in the pursuit of unicorn business status. This strategy thrived during the global liquidity boom. Between 2020 and 2022 alone, India produced more than 70 new unicorns, turning the country into one of the fastest-growing startup ecosystems in the world. Global venture capital firms, hedge funds, and institutional investors poured billions into Indian startups, fueling an era where valuation milestones often became symbols of success. But that era also raised an important question: what happens after the race for speed is over? As capital markets evolve and investors become more disciplined, the ecosystem is beginning to shift its focus from simply building unicorns quickly to building companies that can endure and scale for decades. The Rise of Pre-IPO Startups One of the biggest structural shifts in India’s second startup decade is the growing pipeline of pre-IPO startups. In the past, many startups remained private for extended periods while raising large funding rounds. Today, however, an increasing number of companies are preparing for public market listings as part of their growth strategy. The ecosystem is gradually producing startups that are not just high-growth ventures but IPO-ready businesses with sustainable revenue models. Several startups have already transitioned from venture-backed companies to publicly traded firms, while dozens more are now classified as pre-IPO startups preparing for capital markets. This shift showcases an important evolution: India’s startup ecosystem is no longer just creating disruptive companies; it is building institutional-grade businesses capable of long-term value creation. The Expanding Role of Private Equity Another major difference in this second decade is the increasing role of private equity funds. In the early startup years, venture capital dominated the funding landscape. Most investors focused on early-stage opportunities and short-term valuation growth. Today, however, private equity funds are playing a much larger role in scaling mature startups. Between 2021 and 2025, private equity and venture capital deals in India reached nearly $207 billion, while exit values more than doubled compared with the previous five-year period. This growing participation of private equity funds reflects a structural change in the ecosystem: Private equity funds are increasingly backing late-stage and pre-IPO startups, helping them expand globally and prepare for capital markets. A More Diverse Startup Ecosystem India’s startup ecosystem is also becoming geographically and sectorally more diverse. Earlier, most startups emerged from a few metro hubs like Bengaluru, Delhi-NCR, and Mumbai. Today, startups are increasingly emerging from Tier-2 and Tier-3 cities, reflecting a broader entrepreneurial base. Government initiatives like Startup India have also accelerated this expansion by providing funding, incubation support and regulatory reforms. More importantly, the sectors driving startup growth are evolving. While fintech and ecommerce once dominated the ecosystem, Artificial Intelligence, Deeptech, Climate technology, Space technology and Enterprise SaaS are shaping the next wave. This diversification is helping the ecosystem move beyond consumer internet models toward technology-driven innovation with global relevance. Investors Are Thinking Differently The shift into the second startup decade is also changing how investors evaluate startups. Previously, growth metrics like user acquisition and market expansions were heavily influencing funding decisions. Now, investors are asking deeper questions: This evolution reflects a broader transition from valuation-driven investing to value-driven investing. In other words, the next generation of successful startups may not simply be the fastest-growing ones; they may be the most resilient ones. The Road Ahead for India’s Startup Ecosystem India’s startup ecosystem is moving into a more mature phase, with a growing pipeline of pre-IPO startups, rising unicorn businesses and increasing participation from global and domestic private equity funds. The focus is gradually shifting from building startups quickly to building companies that can scale sustainably and compete globally. As this new phase unfolds, VC funds will play an important role in supporting founders with capital, networks and strategic guidance. The real question for the decade ahead is simple: will Indian startups simply chase the next unicorn business or build companies that redefine global innovation? Startup investing isn’t just for VCs anymore. Understand how the new asset class works. info@finvolve.co
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BY: admin
The liberalization of India’s space sector marked more than a regulatory change; it marked the beginning of market formation. With the establishment of IN-SPACe, access to ISRO infrastructure, and 100% FDI permitted in satellite manufacturing, the government effectively converted a sovereign capability into an investable opportunity. The results are measurable. As per the market stats published in The Hindu, India’s space economy is currently estimated to be at $13 billion with a projection to touch $40 billion by 2030. In the past five years, over 300 SpaceTech startups have emerged across launch systems, satellite manufacturing, geospatial intelligence, propulsion technologies, and climate-monitoring platforms. It reflects structural confidence, and that confidence signals something larger about India’s startup ecosystem. The Gradual Rise of Indigenous Capability The space tech sector has evolved gradually, unlike consumer tech sectors that scaled rapidly on digital infrastructure. For years, Indian private firms participated as suppliers within ISRO-led missions, and that period was formative. It allowed companies to develop engineering discipline, manufacturing precision, and systems integration capability under demanding conditions. Indian space tech founders are building on that base. They are not merely assembling components; they are designing full-stack space systems, owning intellectual property, and securing global contracts. This progression from vendor participation to mission ownership reflects a deeper ecosystem maturity. India is not simply entering SpaceTech; it is entering it with the capability already accumulated. Is Capital the Real Indicator of Growth? India’s recent policy reforms have significantly strengthened the foundation for SpaceTech investments, with FDI norms, the draft Space Activities Bill, and frameworks like the Space-Based Remote Sensing Policy and Spacecom Policy 2020 creating greater regulatory clarity and structured private participation. However, the real indicator of ecosystem maturity is not just policy momentum or startup count, but the type of capital entering the sector. As private equity funds and Alternate Investment Fund (AIF) structures begin backing SpaceTech with longer investment horizons, it signals a shift toward patient, infrastructure-aligned capital and growing institutional confidence in India’s deep-tech capabilities. (Source: https://www.ibef.org/blogs/india-s-private-spacetech-boom-a-new-era-unfolds) Are Indian SpaceTech Startups Still in Formation? In 2024, while overall Indian startup funding grew by nearly 20%, SpaceTech funding declined by 35%, even though the number of deals increased from 11 to 14. Apparently, this may seem contradictory, but it reflects a deeper shift. Investors are becoming more selective in choosing stronger business models and proven technical capability rather than simply chasing sector momentum. Private equity funds and Alternate Investment Fund (AIF) structures are evaluating spacetech with a long-term infrastructure perspective, recognizing that this is a capital-intensive, execution-driven industry. With credible launch milestones, advancing propulsion technologies, and expanding global contracts, Indian SpaceTech startups are gradually moving beyond early experimentation and into a more disciplined phase of growth and consolidation. The shift is supported by tangible milestones, like Satlabs Space, for instance, which is developing advanced satellite subsystems and space-grade components, strengthening India’s domestic supply chain, and contributing to high-performance satellite missions. Such capability-building efforts are gradually increasing India’s participation in international launch and satellite markets, reinforcing its reputation not merely as a cost-efficient alternative but as a credible high-performance innovation hub. What does this rise really mean? The growth of spacetech startup investments in India represents more than just sectoral growth; it signifies evolution within the broader startup ecosystem. It reflects increasing policy stability, rising institutional capital readiness, and a shift toward long-term strategic thinking. When private equity funds and Alternate Investment Fund vehicles begin backing capital-intensive, deep-tech innovation, it indicates confidence that extends beyond short-term opportunity cycles. India’s startup landscape is therefore no longer defined solely by speed or scale but increasingly by depth, durability, and the ability to build enduring technological capability. The Way Forward India’s spacetech is moving from experimentation to structured consolidation, driven by execution capability, regulatory clarity, and quality capital. The sector now rewards technological credibility, governance, and strategic discipline alongside ambition.
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BY: admin
India’s startup ecosystem is entering a decisive phase. After years of platform-led growth and consumer internet dominance, a quieter but far more consequential shift is underway. Deeptech innovation in India, once considered capital-intensive, slow, and risky, is now emerging as a core driver of long-term value creation. This shift is also reflected in capital flows. Deeptech startups account for nearly 25–30% of total venture funding in India, compared to low double digits a decade ago, signalling growing investor confidence in science-led, IP-driven businesses. Central to this transformation are strategic technologies in India, reshaping how investors evaluate scale, defensibility, and global relevance. What makes this India’s Deeptech Moment? India’s tech story used to be all about software, platforms, and what people wanted. Now, we’re seeing a change. The country is focusing on important tech areas like AI, semiconductors, and quantum computing, which need serious science and a long-term plan. The scale of opportunity is significant. Globally, the technology markets, from AI and semiconductors to advanced manufacturing, are collectively expected to cross USD 10 trillion in economic impact over the next decade. India’s ambition is no longer participation, but leadership in select strategic layers of this value chain. What distinguishes this phase is the rare convergence of policy intent and investment capital. Government-led initiatives and private investors are increasingly aligned in backing startups focused on indigenous innovation, resilient supply chains, and strategically critical technologies. This alignment not only de-risks long-term bets but also signals growing confidence in India’s ability to build globally competitive deeptech enterprises. Key Trends for India’s Deeptech Ascent As a new wave of technically strong founders enters the ecosystem, India’s deep tech landscape is evolving rapidly. These founders are not building for short-term market capture; they are building for long-term relevance. This shift is reshaping how capital markets evaluate risk, value creation, and time horizons. 1. Strategic Autonomy One of the most important trends in deeptech innovation in India is the focus on strategic autonomy. Startups are developing indigenous technologies that reduce dependency on global supply chains and imported intellectual property. This shift is timely. The global semiconductor market alone is expected to reach nearly USD 1 trillion by 2030, while supply-chain disruptions over the past few years have highlighted the cost of technological dependence. Indian startups operating across chip design, embedded systems, and specialised hardware are increasingly attracting patient, institutionally backed capital. Investors are no longer looking only at rapid scale; they are evaluating technical depth, defensibility, and long-term strategic value. 2. Academic-Startup Innovation Another powerful accelerant of strategic technologies in India is the growing integration between academic research and entrepreneurship. India produces over 1.5 million engineering graduates annually, alongside a rising output of doctoral research in AI, materials science, and electronics. Consequently, for investors, this improves technology readiness, strengthens defensibility, and enhances the long-term quality of deal flow in deeptech. 3. Capital Market Maturity Historically, deeptech innovation in India has been built with limited visibility on long-term exits, especially through public markets. That narrative is beginning to change. As deeptech in India matures, the public pathways are gradually opening up, offering founders and investors clearer routes for sales and liquidity. Globally, deeptech companies tend to create outsized value over a longer time outlook, and India is now building the institutional infrastructure to support this journey, from late-stage funding to public listings and strategic acquisitions. 4. Global Adoption Indian deeptech is at a turning point, as international demand and partnerships grow. This global interest comes from India’s strong tech talent and the important problems being tackled. Startups working on strategic technologies in India are developing cost-efficient, scalable solutions that address universal challenges such as supply chain resilience, climate transition, healthcare access, and digital infrastructure. This makes Indian deeptech inherently global by design. Global demand reinforces this trend. For instance, the global AI market alone is projected to grow at over 30% CAGR through the next decade, while advanced manufacturing and industrial automation continue to see sustained double-digit growth. Indian startups positioned within these sectors are benefiting from early global partnerships and cross-border deployments. What’s the Road Ahead? India’s deeptech growth isn’t just a short-lived thing. It’s a real change that will shape the future of innovation and the economy. Policy makers and capital allocators are getting ready for this. They’ll put more focus on creating tech systems that last, instead of just looking for quick profits. Investors looking to participate in this transition must embrace the long game, understanding that strategic technologies in India are central to both economic competitiveness and national strength. Deeptech startups may take longer to commercialize, but their potential to shape industries, nations, and futures is unparalleled. India’s not just using future tech; it’s making it.
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BY: admin
Over the decade, India has emerged as one of the most vibrant global startup ecosystems, becoming the third largest startup hub. As of October 2025, DPIIT has recognised 1,97,692 startups under the Startup India initiative. Driven by accelerated digital transformation and government- led innovation, the ecosystem is continuing to mature and showcasing a clear shift in focus from speed-driven expansion to disciplined, sustainable and value-centric growth. Additionally, the Indian startup ecosystem is underscoring strong investor confidence despite global volatility. As per the recent stats, Indian startups attracted $8.5 Mn across 926 deals in the first nine months of 2025. This enforces the growing importance of corporate governance and compliance frameworks, especially for startups eyeing long-term stability and opportunities in the private equity market. Why Is Corporate Governance Necessary for Startups? Corporate governance encompasses the frameworks and principles which guides and manages the company. Although commonly associated with large enterprises, strong governance is just as crucial for startups. Here’s why it is relevant for startups: What’s the current status of corporate governance in startups? Despite its importance, corporate governance is often overlooked in the startup ecosystem. Several recurring patterns and challenges highlight this gap: How Startups Can Drive Positive Change in Corporate Governance? Strengthening corporate governance in startups requires a well-rounded, proactive approach, one that goes beyond compliance and integrates accountability, transparency, and ethical decision-making into the company’s DNA. Here’s how positive change can take place: How can stakeholders contribute to better governance? Strong governance is a collective effort, not the sole responsibility of the founder alone. When every partner in the ecosystem understands their responsibility, governance shifts from a checklist to a culture. Here are some ways: Final Thoughts Whether you’re building or scaling a startup, integrating strong corporate governance into core operations is essential for preventing disruptions and ensuring long-term stability. Beyond resilience, a well-governed startup earns greater credibility in the private equity market, attracts investor confidence, and secures sustainable growth in an increasingly competitive environment. Have you taken a structured approach to embedding corporate governance into your core operations? If not, now is the time to strengthen leadership accountability and market credibility. To know more about corporate governance in startups, please feel free to write to us: info@finvolve.co
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BY: admin
Traditionally, if you wanted to build a startup in India, you were told to pack your bags for metro cities like Bengaluru, Mumbai and Delhi/ NCR. These cities are seen as the natural breeding grounds for innovation and investment. However, the Indian startup landscape has quietly evolved with a notable rise in the Tier 2 city startups. According to the Economic Survey 2024 stats, more than 45% startups recognised with the Department for Promotion of Industry and Internal Trade (DPIIT) emerged from tier-2 and tier-3 cities. Additionally, Tier – 2 and 3 cities startups raised INR 1.13 Tn, showcasing an increasing investor interest across stages, including pre-seed funding for startups. The Quiet Evolution of India’s Startup Landscape The Indian startup ecosystem’s journey began in the early 2000s which was largely shaped by IT and software services companies. The next decade witnessed an uptick in e-commerce, fintech and SaaS companies originating from the technology innovation hubs of Bengaluru, swiftly shifting to NCR in Noida and Gurugram. The success stories of Flipkart, PayTm, Zomato, Ola and many among others set the stage for new-age startups. Further, the government initiatives like Startup India improved digital infrastructure to increase technology adoption in the populace. This gradually expanded the startup culture beyond metros, spawning the need for startup incubators and accelerators and venture capital funds in India showcasing interest in the smaller town startups. Additionally, young founders from Tier 2 cities exposed to global trends and a deep understanding of local problems, began building for both India and the globe. Understanding Why Pre-Seed Funding For Startups Matters Pre-seed funding for startups is the earliest stage of financing which typically validates an idea, builds an MVP (minimum viable product) and assembles an initial team. The ticket size of this funding ranges from INR 25 Lakh to INR 2 Cr. which often angel investors, accelerators, family offices or micro venture capital funds in India lead. Even though fundraising at this stage is less complex, it is critical as it sets the foundation for product-market fit, go-to-market strategy and future funding. Traditionally, startup founders from metro cities had a clear edge in funding, considering the ease of investor access and stronger ecosystem networks. That said, the scenario is beginning to change. The Rise of Tier-II City Startups The tier 2 & 3 cities like Jaipur, Indore, Lucknow, Kochi, Bhubaneswar, Coimbatore and Chandigarh are emerging as thriving startup communities. There are several factors that contribute to the rise in startup funding in India. Solving Local Problems Startups in Tier 2 cities stem from daily realities of India’s semi-urban and rural population. For instance, these solutions include agritech platforms helping farmers get better yields or edtech platforms for small town aspirants or healthcare apps to simplify and make diagnostics accessible. These solutions are deeply embedded in India. Considering the potential of these startups, investors are increasingly recognising that innovation is not just limited to big cities. In fact, it solves second tier and third tier challenges, often opening doors to wider market adoption or usage. Cost-Efficient Operations Keeping a continuous up and running for startups in a Tier 2 city is way more cost-effective than keeping the operations in Tier 1 city. Lower rental expenses, competitive talent pool and reduction in burn rate makes these startups have leaner operating costs and gain market resilience. For investors across all stages, this transitions to more capital efficient ventures in a climate where unit economics matter more than ever. Evolving Investor Mindset Micro and multi-stage venture capital funds in India actively scout beyond the metropolitan cities. Leading accelerators like the India Accelerator back founders from Tier 2 cities, often in early stages. For instance, government or university backed incubators play a catalytic role in this scenario. Remote-First World The pandemic and rise of remote collaboration has redefined the way startups are built. Tier 2 city founders no longer need to move to Bengaluru, Delhi or any other metropolitan city to attract talent, connect with investors or raise funds. If the startup idea is revolutionary, the founder is execution-focused, location can no longer be a barrier. Strengthening Community & Peer Networks Startup events, demo days and mentorship programs are reaching out to Tier 2 cities. For instance, SIDBI and Nasscom are playing an instrumental role in expanding the outreach of startup programs to Tier 2 & 3 cities to support, strengthen and promote the growth of the ecosystem. Startups participating in events like Startup Mahakumbh can leverage strategic collaborations and get access to funding. Key Takeaway The success rate of Tier 2 city startups in funding and expanding with leaner operations is growing at an unprecedented rate. It is a reflection of India’s evolving innovation fabric as investors move beyond big-city biases to support founders who are already working to solve real and scalable problems. Aspiring entrepreneurs in Tier 2 cities are capitalising on the accessibility of infrastructure, capital and mentorship. On the other hand, for investors and ecosystem enablers, it is time to double down on startup investments as the next unicorn may emerge from a coworking or a college dorm in Tier 2 city.
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BY: admin
A couple of Michael Douglas’s movies standout in my memory & they cover two very deadly sins. The first one was about greed, while the other one was extremely popular for covering basic needs of a human being. I ain’t much of a religious man but according to Roman Catholic theology, the seven deadly sins are: pride, greed, lust, envy, gluttony, wrath, and sloth. My two cents – greed shouldn’t belong to the list. The reason is fairly simple – the more wealth you have, better the quantity and quality of the things it brings. How could a desire for wealth, and thus the quality of life it brings, be harmful? How can that be wrong? The desire for wealth has been tightly coupled with that of “progress” and “growth”, something that led to the eras of scientific discovery and world exploration. If early man wasn’t greedy about a more comfortable life, we would still be living in the caves. If our freedom fighters weren’t greedy for independence, we would still be hoping for series win by Kohli’s men so as not to give more lagan 🙂 Thus, although legal and religious lip service against greed have been in effect for millennia, the fact remains that deep down people believe “greed is good”. But not all greed is created equal, and it cuts both ways. Being greedy is different than being manipulative, vain and arrogant. There is good greed and then there is bad greed. Bad greed is all about fraud, illegal or immoral activities which we certainly abhor. Founders being greedy & doing the wrong things (a topic we covered in our last article). Or being overtly focused on keeping the pie to themselves rather than increasing the size of the pie. Such people have taken their eyes off the big prize by thinking small. Investors being greedy and trying to squeeze every bit from a founder rather than supporting them etc. are examples of bad greed. But done the right way, Greed is not only good for your own life but even for people around you. By elevating your life, you can radically elevate your family’s life, your community, your country and yes, even the world. But I am surprised to see our moral dilemma even about good greed. Is it about socialist leanings, is it about our middle-class upbringing? Money is one of those taboo topics in society that we don’t like to talk about. We’ll admire athletes and celebrities and envy them for the money they have, yet we get uncomfortable when the “M” word is brought up in our reference. Thankfully we are changing now, as a community, as a society, as a country. All this philosophical discussion about greed leads us to a very important point about the current investment climate and lays out the blueprint for our investors. It revolves around two things – Get in & Get out. Ok, so what do we mean by that? One, get into this startup ecosystem. Technology innovation is a Gold rush of our time. 5th Era is on us. A perfect storm of black swans is coming; There is NO returning back to the past normal. And this transition phase & arrival of fifth era represents the greatest wealth creation opportunities that the world has ever seen. And this wealth creation is being capitalized early, primarily by the entrepreneurs who are taking advantage of disruptive innovations and by the angels & venture capitalists who are backing them. You can’t afford to sit on the sidelines and not be engaged in this multi-generation wealth-creating, life-changing moment. Every industry is being transformed and wealth is shifting to new disruptive players and those who back them. Today’s most valuable companies are being built in the spirit of entrepreneurialism and technological innovation. And much of the value creation occurs before the companies go public, which means that most investors are not participating in this unprecedented wealth creation cycle. Correct that – Get in this game NOW! But ‘Buying right’ i.e. investing in the right opportunities using the right structures, is only half the story. You also need to focus on ‘Exiting well’ i.e. getting the money back at a good price and in a reasonable time frame. So the other part of this equation is to Get-Out. Startup funding is less about investment but more about exits. Organized angel investing is still quite new in India, we are still discovering the best practices but it is clear that you need a completely different template and model to make money compared to that of VCs. A focus on exits is healthy. Rotate the money. The profits investors make get ploughed back into the ecosystem to enrich it, to fund more budding entrepreneurs, thus kicking off a critical chain reaction which takes the entire ecosystem forward. Today, the optimum financial strategy for most technology entrepreneurs should be to raise money from angels and plan for an early exit to a large company in just a few years for $15-25 million. Downside of investing in larger deals is the long gestation period which delays the exit and increases the risk of failure. The payoffs for this strategy might not be as large as some of the earlier moon shots in the last few years of the 20th century, like Google, Skype or PayPal, but they come far more often—and with much less risk. It’s similar to a cricket team concentrating on hitting consistent singles and doubles rather than hoping for the big shots to put them in the win category. It’s old time ball playing— and investing—and it’s the complete opposite of the swing for the fences mentality that emerged over the past couple of decades. My premise is that startups and emerging companies should adopt this new, simple approach—start small, stay lean, raise only the funding you really need, grow the business judiciously and then execute an early exit. As India Accelerator, we have had a few exits ourselves. And we can
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BY: admin
I met a fellow VC last week and discussion veered around their fund thesis and the cheque sizes that they cut. He mentioned that they do only Series A & B rounds. And in the same vein, he also added that would be around Rs 100-150 cr each investment! Clearly the ‘letter attribution’ in VC funding rounds has lost its significance. Signalling is important but it really doesn’t matter now what you call your round. So, obsessing over these labels is a waste but the alphabets which have truly become significant now are J & K but for a different reason. Historically, venture capital has followed the J-curve: funds suffered initial losses as they deployed capital, then rebounded when portfolio companies matured. But post-2010, a new reality emerged—one where elite funds pulled ahead while mid-tier and lower-tier funds faltered. U.S. VC funds raised about $75 billion in 2024. While it is the lowest total since 2019, but the fact that only 30 funds secured roughly 75% of that total raise is staggering. Classic case of feast & famine (aka K-Curve) where the buffet is endless for those who’re already at the table. The fats aren’t just getting fatter—they now own the food supply. The laggards, on the other hand, find themselves squeezed out of the market. Here’s how it plays out: 1. The Upward Sloping Arm of K-curve: The Elite Funds 2. The Downward Spiral: The Struggling Funds If the J-curve once defined fund returns, the K-curve now rules the landscape. The privileged ones, armed with capital, networks, and brand power, keep getting bigger. Those at the top rise further, while those at the bottom sink faster. The Future is getting more polarized with much less middle ground. This is not a passing trend—it’s the new reality. This hollowing out in the middle means that venture firms with medium funds and medium teams will have medium returns and will be medium competitive. The industry is going through its own Darwinian selection. For years, the VC game looked predictable- capital was abundant, valuations soared, and most players assumed they had a winning position. But now, the board has been reset. The chessboard has been cleared. The irony is while the smaller funds struggle to raise more funds, the comprehensive data from various sources clearly indicates that these small VC funds outperform large VC funds across multiple performance metrics, including TVPI and IRR. The flexibility of such specialised funds, their focus on high-growth early-stage investments, and lower operational overheads contribute to their superior returns. There are good reasons for small, nimble specialised funds to escape the downward trajectory of the K-curve: The DeepSeek moment is heartening for all the Davids vs Goliaths story, for everyone who is rooting for the smaller guy (even if it was a Chinese this time 😀). DeepSeek wasn’t just about AI. It signalled a broader shift across industries, including venture capital, entertainment, sports…where underdogs are now disrupting long-standing power structures. Nvidia, Open AI will stay. Mega Funds will stay. But there will always be space for the fact, nimble, smaller, faster guy. Indians already have shown this capability where we have set world-beating cost-effective precedents in the past e.g. DPI, ISRO etc. If the innovations can be developed with only millions of dollars than billions, they surely can be funded by millions-of-dollars rather than billions. Barbell effect is in play – Only two extremes shall thrive: high-budget, massive-scale or lean, high-ROI disruptors. The squeezed middle is fading, fast. In this high-stakes environment, survival of the fittest is no longer just a catchphrase; it’s the law of the jungle., startups can build resilient, scalable, and ethically sound businesses that stand the test of time.
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BY: admin
Why is Corporate Governance Necessary for Startups? Corporate governance refers to the set of systems, principles, and processes by which a company is directed and controlled. While often associated with large corporations, corporate governance is equally crucial for startups. Here’s why: Exit Strategies and IPO Readiness: If a startup plans for an IPO or an acquisition, investors demand structured governance frameworks before committing funds Investor Confidence: A well-governed startup attracts investors, as it ensures transparency, accountability, and risk management Scalability and Sustainability: Strong governance structures help startups scale efficiently, minimizing internal conflicts and ensuring smooth decision-making Regulatory Compliance: Startups must comply with various laws, such as the Companies Act, SEBI regulations (if raising funds in India), and taxation norms. Poor governance can lead to legal troubles Reputation and Trust: A well-governed startup builds trust among customers, employees, and stakeholders, leading to long-term success The Current Status of Corporate Governance in Startups Despite its importance, corporate governance in startups is often overlooked. Here are some key trends and challenges: How to Bring About Positive Change in Corporate Governance for Startups? To strengthen corporate governance in startups, a multi-faceted approach is required: What Should Respective Stakeholders Do? Conclusion Corporate governance is not just for large corporations — it is equally essential for startups. Good governance fosters investor confidence, mitigates risks, and ensures long-term sustainability. While many startups struggle with governance challenges, proactive steps by founders, investors, and regulators can bring about a positive shift. By embedding strong governance principles early on, startups can build resilient, scalable, and ethically sound businesses that stand the test of time.
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