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India-focused venture capital (VC) funds have raised about $2.5 billion across 20 new vehicles so far in calendar 2025, outpacing the $1.6 billion secured via 16 funds in 2024 and $1.9 billion across 19 funds in 2023, according to Venture Intelligence. Although the pace of final closes has ticked up only marginally, more managers are back in the market to raise funds, in an indication that investors expect deal activity to gain momentum over the next few years.
According to Venture Intelligence, Accel India, Peak XV Partners and Blume Ventures have been the three most active India‑based VC investors in 2025 so far, with 43, 41 and 32 deals, respectively, followed by Info Edge, DeVC India and Elevation Capital, each closing between 24 and 28 deals.
Including green-shoe options and full target sizes, India-focused VC and private equity (PE) funds launched or currently in the market in 2025 are seeking about $9 billion in total. But so far only around $2.5 billion has been closed, according to a July-September Inc42 fund-raising report. A green-shoe option is a clause that allows a company to raise additional capital beyond its original target if investor demand is high.
Most of this fresh capital is earmarked for early-stage deals, even as a VCCircle report pegs uninvested capital or ‘dry powder' at around $100 billion, underscoring that there is ample money waiting to be deployed into Indian startups over the next year.
Despite the large pool of uninvested capital, venture capitalists and advisers tracking the sector expect deployment by both domestic and foreign funds to stay muted or at best flat in 2026.
An EY report shows that PE and VC investments rose to $5.3 billion in October 2025, up 9% both from a year earlier and the month prior. However, deal volume fell 9% from a year ago to 102 and dropped 30% from 145 in September.
“I would be surprised if next year is more turbulent than 2025,” said Alok Goyal, partner at Stellaris Venture Partners. “This has probably been the most turbulent year economically in my memory, and I think 2025 has set a benchmark of volatility that we [think] can probably only be better in 2026.”
Goyal said the sharp rise in venture‑backed initial public offerings (IPOs), often one or two listings a week, is already boosting investor confidence and market liquidity. He expects this to translate into a more active investment cycle in 2026, including in growth and late‑stage deals.
Stellaris has raised over $600 million across three India‑focused funds, and counts Mamaearth and Whatfix among its biggest exits. It closed its latest $300 million fund in late 2024.
Indian VC funds are also seeing a shift in their limited partner (LP) base, with domestic family offices emerging as a more important pool of capital for early‑stage managers. Mint had earlier reported that several prominent Indian families have increased allocations to small venture funds, choosing to come in earlier, hold for longer and aim for higher returns as startup IPOs and secondary deals deepen the exit market.
Artha Ventures, one of the country’s more active seed investors, expects to end 2025 with around ₹1,000 crore raised across its vehicles and roughly 15–18 term sheets issued, of which 10–12 are likely to convert into completed deals. The Mumbai‑based firm has backed companies such as Everest Fleet, Agnikul Cosmos and Exotel early, and has recorded double‑digit exits over the past decade.
Founder and managing partner Anirudh Damani says roughly 80% of Artha’s capital now comes from domestic family offices, with the rest split between institutions and ultra‑rich individuals and advisors.
Many tech founders and senior startup employees are also redeploying ESOP (employee stock ownership plan) gains into seed deals, he added, but warned that early‑stage investing “demands more time than money”, and needs a dedicated team, not just cheque‑writing capacity.
Damani said the rush of easy money during the boom years tempted many ultra‑rich investors to bypass funds and write many angel cheques on their own, often with minimal diligence or follow‑up.
“I know people who made a hundred investments in 18 months in the boom years in 2021 and 2022, which meant they were making one investment roughly every five days…and a lot of them have left the ecosystem because they have lost much of this cash and are disillusioned with the investments they have made,” he added.
This shift in LP appetite is not limited to generalist seed funds. It is also showing up in specialist strategies such as deeptech, where managers say domestic capital is finally starting to underwrite longer‑gestation bets, instead of leaving the space to offshore investors.
A limited partner is an investor who provides capital to a VC fund, but stays away from its day-to-day management.
Vishesh Rajaram, managing partner at Speciale Invest, said the firm's third fund—a deeptech‑focused early‑stage vehicle of about ₹600 crore—saw 80% of its capital anchored largely by domestic family offices, successful founders and high net worth individuals (HNIs).
Rajaram sees this as a clear break from earlier cycles, when most deeptech capital came from offshore LPs. “We are now seeing Indian family offices and founders actively choosing real technology, IP and hard problems over pure consumer convenience stories,” he said, adding that “a lot of that comes from the hard lessons everyone learnt in the 2021–22 froth in consumer and fintech.”
He also explained that the deeptech sector still suffers from a “lack of patient capital”, something that many surveys have found, given the high capex, long product cycles and uncertain exit paths in areas such as spacetech and semiconductors.
That is why Speciale has tried to identify LPs who are comfortable with 10–12 year investment horizons.
“You cannot build a spacetech or semiconductor company on a five‑year return clock,” he said. “If you do that, you are setting up both founders and LPs for disappointment, which is why we spend a lot of time upfront aligning expectations on time‑to‑liquidity, and the fact that many deeptech exits will come via M&As (mergers and acquisitions) and strategic sales rather than classic consumer‑style IPOs.”
Gautami Gavankar, president, banking solutions at Kotak Mahindra Bank, said that there is a clear difference between individual HNIs, who typically lack the bandwidth to analyse startups, and “proper” family offices with dedicated private‑markets teams.
Individual HNIs, she said, are better off accessing the asset class through VC, PE or alternative investment funds (AIFs) that bring a track record, defined diligence processes and diversification, while larger family offices can pursue direct startup bets, co‑invest alongside funds or even run their own corporate VC and angel programmes.
When Kotak evaluates a VC fund for its clients, Gavankar said, it looks at the manager’s vintage, assets under management, realised and unrealised performance, the quality of the underlying portfolio, and the rigour of its investment and diligence processes.
She added that understanding the fund structure is equally important: most VC funds run for six years with two one‑year extensions, call capital over the first three to four years and then start distributions, with contracts allowing managers to extend by up to two years to wait for exits, something that often annoys investors when public markets are doing well.
“People do get impatient with extensions, especially when listed markets have done really well and private marks are lagging,” she said. “That is why we tell clients very clearly at the start that this is long‑duration, illiquid capital and sophisticated investors are the right people to be here.”
On performance measurement, Goyal of Stellaris Venture Partners said, “the most objective measures” that LPs track are DPI (distributions to paid‑in capital, or how much cash has actually been returned to investors as a proportion of the capital) and dollar IRR (internal rate of return). The total value to paid‑in capital (TVPI), including both realised and on‑paper gains, is used more at earlier stages.
Goyal offered a simple yardstick for what strong performance looks like. For a venture fund that started investing around 2017, he said a reasonable external benchmark for a top‑decile fund is a dollar IRR of about 21.8% a year over the fund’s life. This is “not our benchmark, it’s a public benchmark”, he emphasized, but it is a useful example of the kind of long‑term, dollar‑denominated return that global LPs would regard as “good” for a top‑tier India fund.