Key Takeaways
- • Domestic venture fundraising in India doubled to $5.4 billion in 2025, according to a Grant Thornton Bharat and IVCA report, opening opportunities for first- and second-time fund managers.
- • Seed funding fell 37 per cent in the first nine months of 2026, raising the bar for investors backing early-stage startups.
- • India's recognised startup base crossed 250,000 in October 2026, and more than half of recognised startups are based outside major metropolitan centres.
- • The Emerging Managers Report 2026 urges managers to pursue research-led strategies, align fund sizes with realistic exit prospects, and reserve capital for follow-on investments.
- • The report recommends a dedicated first-time manager pathway under the ₹10,000-crore Startup India Fund of Funds 2.0.
Summary
India's emerging venture capital fund managers have a growing pool of startups to back, with the country's recognised startup base surpassing 250,000 in October 2026. However, a 37 per cent decline in seed funding during the first nine months of the year is making it harder for investors to back early-stage companies, according to Business Standard.
Domestic venture fundraising doubled to $5.4 billion in 2025, creating openings for first- and second-time fund managers with specialist sector expertise and focused strategies. These figures come from the Emerging Managers Report 2026, titled "From First Fund to Lasting Franchise," prepared by Grant Thornton Bharat and the Indian Venture and Alternate Capital Association (IVCA). The study also found that more than half of the country's recognised startups are located outside major metropolitan centres.
Amarjeet Makhija, partner at Grant Thornton Bharat, said emerging managers building investment theses on rigorous research and independent conviction may face a tougher first fundraise but improve their long-term prospects. He advised managers to demonstrate a clear investment strategy, differentiated sourcing and a pipeline of companies fitting their thesis before approaching limited partners. Anisha Singh, founder and managing partner of She Capital and co-chair of the IVCA emerging managers council, said the priority is strengthening access to institutional capital, creating more predictable liquidity pathways and enabling credible managers to scale beyond their first fund.
Looking ahead to 2030, the report urges emerging managers to adopt research-led strategies, align fund sizes with realistic exit prospects, maintain reserves for follow-on investments and support portfolio companies through exits, including strategic sales, secondary transactions and IPOs. It also recommends a dedicated pathway for first-time managers under the ₹10,000-crore Startup India Fund of Funds 2.0 to improve their access to capital.
The report argues that India's venture ecosystem is no longer constrained by a lack of entrepreneurial ambition or capital. The next challenge is enabling a broader base of fund managers to consistently identify promising businesses, support them through growth stages and deliver returns. While fundraising conditions have improved, expectations around performance, governance and liquidity have risen in parallel.
Domestic venture fundraising doubled to $5.4 billion in 2025, creating openings for first- and second-time fund managers with specialist sector expertise and focused strategies. These figures come from the Emerging Managers Report 2026, titled "From First Fund to Lasting Franchise," prepared by Grant Thornton Bharat and the Indian Venture and Alternate Capital Association (IVCA). The study also found that more than half of the country's recognised startups are located outside major metropolitan centres.
Amarjeet Makhija, partner at Grant Thornton Bharat, said emerging managers building investment theses on rigorous research and independent conviction may face a tougher first fundraise but improve their long-term prospects. He advised managers to demonstrate a clear investment strategy, differentiated sourcing and a pipeline of companies fitting their thesis before approaching limited partners. Anisha Singh, founder and managing partner of She Capital and co-chair of the IVCA emerging managers council, said the priority is strengthening access to institutional capital, creating more predictable liquidity pathways and enabling credible managers to scale beyond their first fund.
Looking ahead to 2030, the report urges emerging managers to adopt research-led strategies, align fund sizes with realistic exit prospects, maintain reserves for follow-on investments and support portfolio companies through exits, including strategic sales, secondary transactions and IPOs. It also recommends a dedicated pathway for first-time managers under the ₹10,000-crore Startup India Fund of Funds 2.0 to improve their access to capital.
The report argues that India's venture ecosystem is no longer constrained by a lack of entrepreneurial ambition or capital. The next challenge is enabling a broader base of fund managers to consistently identify promising businesses, support them through growth stages and deliver returns. While fundraising conditions have improved, expectations around performance, governance and liquidity have risen in parallel.
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