India’s emerging venture fund managers have a growing opportunity as the country’s recognised startup base crosses 2.5 lakh. More than half of these startups are located outside metropolitan cities, according to a new report.
The report by Grant Thornton Bharat and the Indian Venture and Alternate Capital Association (IVCA) highlighted opportunities for specialist investment funds.
However, the funding environment is becoming more selective. Domestic venture fundraising doubled to $5.4 billion in 2025, while seed-stage funding declined 37 per cent during the first nine months of 2026.
The report said specialist fund managers would play an important role in identifying promising businesses. They could also help deliver stronger returns for investors.
Emerging fund managers need focused investment strategies
The report identified several priorities for emerging managers seeking better exits and stronger returns for limited partners (LPs).
These include developing clear, research-led investment strategies and aligning fund sizes with realistic exit opportunities. Additionally, managers should maintain disciplined reserves for follow-on funding rounds.
The report also highlighted the importance of actively supporting portfolio companies during their growth stages. Early planning for strategic sales, secondary transactions and initial public offerings could further improve exit opportunities.
Grant Thornton Bharat Partner Amarjeet Makhija said rigorous research and independent conviction were essential. He acknowledged that these qualities could make initial fundraising more challenging.
However, he said they could improve the prospects of long-term success.
“Before approaching LPs, managers should be able to demonstrate a clear investment strategy, differentiated sourcing and a pipeline of companies that fit the thesis,” Makhija said.
Report seeks dedicated support for first-time fund managers
The report called for a stronger support system to help emerging venture fund managers. Specifically, it recommended a dedicated pathway for first-time managers under the Rs 10,000 crore Startup India Fund of Funds 2.0.
Such support could help credible managers access institutional capital and build specialist investment funds. Consequently, these funds could channel long-term capital into India’s startup and innovation ecosystem.
Anisha Singh, Founder and Managing Partner of She Capital, highlighted the role of emerging managers. She also serves as an IVCA Executive Committee Member and Co-Chair of its Emerging Managers Council.
Singh said emerging managers identify new sectors and support underserved investment opportunities. They also help broaden India’s investment landscape.
She called for better access to institutional capital and more predictable liquidity pathways. Furthermore, she said credible managers needed opportunities to expand beyond their first funds.
“A stronger emerging manager ecosystem is essential to the long-term depth and resilience of India’s private capital markets,” Singh said.
The report said these measures could strengthen India’s private capital ecosystem. They could also help specialist fund managers support startups across emerging sectors and regions.
