BY: admin
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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BY: admin
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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BY: admin
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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BY: admin
Why Corporate Governance Matters in Startup Investments
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
How Tier 2 Cities Are Winning at Pre-Seed Funding for Startups
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
Greed Is Good? A New Take on Growth, Grit, and Guts
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
A, B, C, D, E,…….J, K
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
Corporate Governance for Startups: A Necessity, Not a Luxury
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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BY: admin
Challenges during Investment Exits
Challenges During Private Equity Investment Exits Exiting an investment successfully is one of the most critical phases of the private equity (PE) lifecycle. While making an investment involves extensive due diligence and strategic planning, exiting requires even more careful consideration to maximize returns and satisfy stakeholders. Various challenges can arise during the exit process, potentially impacting the value and timing of the transaction. Here are five key challenges that private equity investors commonly face during exit planning: 1. Timing of Exit One of the most significant challenges in private equity exits is determining the right time to invest. Market conditions, economic cycles, and industry trends all play a crucial role in deciding when to exit an investment. Exiting during a downturn or an unfavourable market environment can result in lower valuations and reduced buyer interest, which may lead to lower returns for investors. On the other hand, waiting too long can lead to missed opportunities if market conditions deteriorate. The timing must align with not only the broader economic climate but also the portfolio company’s growth trajectory and readiness for a liquidity event. 2. Preparation of Founders A successful exit requires thorough preparation of the company’s leadership, particularly the founders and management team. Founders may not always have prior experience with exit processes, making it crucial for private equity firms to educate and align them with the exit strategy. Key areas such as financial reporting, operational efficiencies, and strategic planning must be addressed to ensure a smooth transition. If the founders are not adequately prepared, it can lead to miscommunication, unrealistic expectations, and ultimately, delays or failure in the exit process. 3. Valuation Mismatch Achieving the desired valuation is often a major hurdle in private equity exits. Investors may have high expectations based on the growth and profitability of the company, while potential buyers may perceive risks or have a different perspective on the business’s future potential. This valuation mismatch can lead to prolonged negotiations or even failed deals. Private equity firms must manage expectations carefully and use benchmarking, third-party valuations, and strategic positioning to bridge the gap between their expectations and market realities. 4. Due Diligence Failure Due diligence is a crucial part of any exit process, allowing potential buyers to thoroughly assess the financial, operational, and legal aspects of the business. However, failure to address issues during due diligence can derail the exit. Common pitfalls include inconsistencies in financial reporting, unresolved legal liabilities, and undisclosed operational risks. A lack of preparedness in these areas can lead to renegotiations, price reductions, or deal cancellations. Conducting pre-exit due diligence and addressing potential red flags in advance can significantly improve the chances of a smooth transaction. 5. Finding the Right Buyer Identifying the ideal buyer is a critical factor in ensuring a successful exit. Not all buyers have the same strategic vision, financial capability, or long-term interest in the business. Private equity firms need to evaluate potential buyers based on strategic fit, financial strength, and their ability to scale the business further. The right buyer not only ensures a fair valuation but also helps in maintaining the company’s legacy and sustaining long-term growth. Engaging investment bankers, leveraging industry networks, and running a competitive sale process can help in finding the most suitable buyer. Conclusion Navigating the complexities of an exit in private equity requires careful planning, strategic foresight, and a thorough understanding of market dynamics. A well-prepared exit strategy can help overcome challenges related to timing, valuation, and due diligence while ensuring that the company finds the right buyer. This is where the role of an experienced fund manager becomes crucial. A skilled fund manager can anticipate potential hurdles, align stakeholders, and create a structured exit roadmap that maximizes value for investors. Ultimately, a successful exit not only delivers financial returns but also solidifies the reputation of the private equity firm in the investment community.
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BY: admin
Don’t Fall, Stay Rooted
Don’t Fall, Stay Rooted Background & Context Building a business is a multi decadal journey. More so when the goal is to transform your startup into an institutional legacy. Focusing on long-term results can really suck sometimes and requires a lot of discipline, perseverance, pivoting and mental strength. It can feel like a grind for the founders, and it can leave one frustrated with the lack of immediate results. How do you build that unending stream of intrinsic motivation? With this simple formula: Values > Value > Valuation When your values – principles, beliefs, mindsets & behaviour drives you to create value for your customers & stakeholders which in turn soars your valuation. When you chase them from right to left, you are putting off anything that appears difficult, in order to do something that’s a lot simpler, and usually offers instant and noticeable results. In this day and age, when founders look for quick wins and play a short game they are bound to make mistakes compromising on values which lead to governance issues creating a deeper hole for themselves and their startup. Current State & Paradox Let’s put this straight, the global acclaim of Indian entrepreneurs is undeniable. A study conducted by Ilya Strebulev, Professor of Finance at Stanford Graduate School of Business, revealed that 90 of the 1,078 founders behind 500 US unicorns were from India, almost double the number of founders from the next two nations—Israel and Canada. Additionally, 35 of the Fortune 500 companies have Indian-origin CEOs. Besides, Indians are increasingly leading many influential family offices and sovereign wealth funds in GCC countries. These achievements are a testament to the traits often associated with Indians: leaders, innovators and hard workers with strong moral values, ethical conduct and a law-abiding nature. Yet, despite this track record, a stark contrast is evident in India’s start-up ecosystem. We have seen corporate governance lapses from Unicorns – BharatPe & Byju’s to e-commerce marketplaces – Zilingo and Trell to auto-workshop platform GoMechanic and health tech startup Mojocare. Here, we encounter many governance challenges that mar the startup ecosystem landscape. This raises a critical question: Why do Indian entrepreneurs face such challenges in their own country? This paradox shows an anomaly in our societal conduct, which prompts us to question whether the Indian start-up ecosystem might inadvertently nurture a culture that compromises governance. Hence, aligning our domestic success with our international reputation is critical to sustaining India’s entrepreneurial spirit. Embracing Change If Ashneer Grover had to exit today over glaring corporate-governance issues at BharatPe, his 9.5% stake, currently worth Rs 2,000 crore, would shrink to Rs 95,000. That is, if one considers the new “exit clauses” that are implemented in Shareholder Agreements (SHAs) by leading Venture Capital (VC) firms. This clause, part of the ‘Promoters Lock-in & Vesting’ section of the SHA ensures departing founders exit at ‘nominal value’ and not ‘market value’—sharply reducing potential payouts to them specifically when they are part of a ‘Bad Leaver situation’. Imagine a founder who owns 10% of a company with 100,000 shares, each valued nominally at Rs 10. That means, their stake is worth Rs 1 lakh (US$1,200) [10,000 shares * Rs 10]. But if the market values each share at Rs 500, their stake balloons to Rs 50 lakh. But if constrained to the nominal value, they would pocket only Rs 1 lakh when they are leaving on bad terms from the business. Who would be defined as a bad leaver from a VC perspective? Typically, founders who exit due to serious misconduct, criminal charges, breach of non-compete or shareholder agreements, voluntary resignation, or leaving before hitting key milestones like full vesting of their shares. Exit of founders on account of gross negligence and wilful misconduct also triggers bad leaver provisions. Negotiations—once fixated on valuations—now dance around affirmative rights, information rights, liquidation preferences, board-seat composition, and founder exit terms. There is a renewed focus by VCs to conduct reference checks at customer sites, employees and at vendor partners of the startup to ensure that there are no surprises in the future. Importance Startup governance is critica! A commitment to strong governance is not just a matter of compliance, it’s a strategic imperative for sustainable successful business in the dynamic world of startups. Yet we have seen that it is the most neglected aspect of a startup journey. Governance, often viewed as a non-financial aspect, has a direct and substantial impact on financial performance. Good governance is about being fair, having a long-term vision. This can be done by maximizing shareholder value, creating symmetry in information dissemination across stakeholder groups and by building a culture and value system. Transparency in operations, not only builds trust but also elevates brand value, not just for individual companies but for the entire industry and country. Today governance also goes beyond governance in the sense of how you run a company. It also involves environmental issues, sustainability and ESG is a big issue. A New Dawn No matter how many checks and balances are put in, there is nothing more important than Self-regulation. Doing Things Right when no is watching over your shoulder holds the key for startup founders. Now more than ever – India’s start-up ecosystem, Founders and VCs need to realign their focus towards creating sustainable and robust firms, capable of withstanding various market conditions. It’s encouraging to see a shift in the ecosystem, where profitability is starting to gain the recognition it deserves. Startups should create value by unlocking innovation, generate employment, satisfy customers and impact society positively. This is the only path for Viksit Bharat and it starts with the founder first! #governance #startup #venturecapital #values #principles
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