Key Takeaways
- • Domestic venture fundraising in India doubled to $5.4 billion in 2025, according to a new Grant Thornton Bharat and IVCA report.
- • Seed-stage funding declined 37% during the first nine months of 2026, signaling a more selective investment environment.
- • India's recognised startup base crossed 2.5 lakh in October 2026, with more than half located outside metropolitan cities.
- • The report urges emerging managers to build research-led theses, size funds to realistic exits, and reserve capital for follow-ons.
- • The report recommends a dedicated pathway for emerging managers under the Rs. 10,000 crore Startup India Fund of Funds 2.0.
Summary
India's recognised startup base crossed 2.5 lakh in October 2026, creating growing opportunities for emerging venture capital fund managers, according to a new report by Grant Thornton Bharat and the Indian Venture and Alternate Capital Association (IVCA). The report finds that more than half of recognised startups are located outside major metropolitan cities, reflecting a broadening geographic base for the country's entrepreneurial ecosystem.
The findings come against a shifting venture capital backdrop. Domestic venture fundraising doubled to $5.4 billion in 2025, but seed-stage funding fell 37% in the first nine months of 2026, pointing to a more selective investment climate. The report argues that emerging managers can play a central role in identifying high-potential businesses, backing underserved sectors and generating stronger returns for investors.
To compete in an increasingly crowded fundraising market, the report says emerging managers need clear, research-led investment strategies and disciplined execution. Its stated priorities include differentiated investment theses, fund sizes aligned with realistic exit opportunities, and adequate reserves for follow-on investments. Active portfolio support and early exit planning through strategic sales, secondary transactions and IPOs are also highlighted.
Amarjeet Makhija, Partner at Grant Thornton Bharat, said managers who build strategies around rigorous research and independent conviction may face greater challenges in initial fundraising but are better positioned for long-term success. He emphasised demonstrating a clear strategy, differentiated deal sourcing and a strong pipeline aligned with the fund's thesis before approaching limited partners. Anisha Singh, Founder and Managing Partner of She Capital and Co-Chair of the Emerging Managers Council at IVCA, highlighted the role of emerging managers in opening new sectors and broadening India's investment landscape.
The report calls for stronger institutional support for first-time fund managers, recommending a dedicated pathway for emerging managers under the Rs. 10,000 crore Startup India Fund of Funds 2.0. The measures could help such managers build specialised platforms and channel long-term capital into the startup and innovation ecosystem.
The findings come against a shifting venture capital backdrop. Domestic venture fundraising doubled to $5.4 billion in 2025, but seed-stage funding fell 37% in the first nine months of 2026, pointing to a more selective investment climate. The report argues that emerging managers can play a central role in identifying high-potential businesses, backing underserved sectors and generating stronger returns for investors.
To compete in an increasingly crowded fundraising market, the report says emerging managers need clear, research-led investment strategies and disciplined execution. Its stated priorities include differentiated investment theses, fund sizes aligned with realistic exit opportunities, and adequate reserves for follow-on investments. Active portfolio support and early exit planning through strategic sales, secondary transactions and IPOs are also highlighted.
Amarjeet Makhija, Partner at Grant Thornton Bharat, said managers who build strategies around rigorous research and independent conviction may face greater challenges in initial fundraising but are better positioned for long-term success. He emphasised demonstrating a clear strategy, differentiated deal sourcing and a strong pipeline aligned with the fund's thesis before approaching limited partners. Anisha Singh, Founder and Managing Partner of She Capital and Co-Chair of the Emerging Managers Council at IVCA, highlighted the role of emerging managers in opening new sectors and broadening India's investment landscape.
The report calls for stronger institutional support for first-time fund managers, recommending a dedicated pathway for emerging managers under the Rs. 10,000 crore Startup India Fund of Funds 2.0. The measures could help such managers build specialised platforms and channel long-term capital into the startup and innovation ecosystem.
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