India’s domestic venture fundraising doubled to $5.4 billion in 2025, while declining seed-stage investments highlight a more selective funding environment and growing opportunities for specialist fund managers.
India’s expanding startup ecosystem is creating significant opportunities for emerging venture capital fund managers, as the country’s recognised startup base crossed 2.5 lakh in October 2026. According to a new report by Grant Thornton Bharat and the Indian Venture and Alternate Capital Association (IVCA), the evolving investment landscape is creating room for specialist fund managers to identify promising businesses and channel capital into emerging sectors.
The report highlights that more than half of India’s recognised startups are located outside metropolitan cities, reflecting the growing geographical diversity of the country’s entrepreneurial ecosystem.
The development comes amid changing venture capital investment trends. Domestic venture fundraising doubled to $5.4 billion in 2025. However, seed-stage funding declined by 37% during the first nine months of 2026, indicating a more selective investment environment.
Against this backdrop, emerging venture fund managers are expected to play a crucial role in identifying high-potential startups, supporting businesses through their growth journeys and generating stronger returns for investors.
According to the Grant Thornton Bharat-IVCA report, emerging managers will need to establish clear, research-led investment strategies and demonstrate strong investment discipline to succeed in an increasingly competitive fundraising environment.
The report identifies several priorities for emerging fund managers, including developing differentiated investment theses, aligning fund sizes with realistic exit opportunities and maintaining adequate reserves for follow-on investments. Active portfolio support and early planning for exits through strategic sales, secondary transactions and initial public offerings (IPOs) are also highlighted as important factors.
Commenting on the findings, Amarjeet Makhija, Partner at Grant Thornton Bharat, said emerging managers who build their investment strategies around rigorous research and independent conviction may face greater challenges during their initial fundraising efforts but are better positioned for long-term success.
He emphasised the importance of demonstrating a clear investment strategy, differentiated deal sourcing capabilities and a strong pipeline of companies aligned with the fund’s investment thesis before approaching limited partners (LPs).
Anisha Singh, Founder and Managing Partner of She Capital, Executive Committee Member and Co-Chair of the Emerging Managers Council at IVCA, highlighted the role of emerging fund managers in identifying new sectors, backing underserved opportunities and broadening India’s investment landscape.
The report also calls for a stronger institutional support system for first-time fund managers. One of its key recommendations is to establish a dedicated pathway for emerging managers under the Rs. 10,000 crore Startup India Fund of Funds 2.0.
Such measures could help emerging fund managers build specialised investment platforms and channel long-term capital into India’s startup and innovation ecosystem.
As India’s startup base continues to expand beyond major metropolitan centres, the growing role of specialist venture funds could help connect promising businesses with institutional capital, strengthen early-stage financing and support the next phase of entrepreneurial growth.
-By: Aakriti Jaiswal