The venture capital (VC) landscape saw a surge of activity in 2024. Over 30 new VC firms entered the market. This trend is expected to continue in 2025.
Many of these new firms are led by experienced founders, CEOs, and investors. They have exited their previous ventures and turned to fund management. For example, former Orios Venture Partners managing partners Anup Jain and Rajeev Suri launched BlueGreen Ventures.
It is a $75-million fund aimed at early-stage startups. Kissflow founder Suresh Sambandam established MudhalVC. It nurtures idea-stage startups in Tamil Nadu, focusing on tier-2 and tier-3 cities.
“The continued innovation in new businesses, paired with their need for growth capital, makes this an exciting time for specialist investors like us,” said Vikas Choudhary, founder of Playbook Partners. Experts see this new wave of boutique VCs as a significant shift in India’s investment ecosystem.
India’s new boutique VC trend
“These firms represent a new generation of investors focused on specialization, founder-first principles, and regional opportunities,” said Milan Sharma, founder and MD of 35North Ventures. India, with 1,812 VC firms, remains the world’s third-largest startup ecosystem, after the US and China. The US and China have around 2,800 and 2,280 active firms, respectively.
This highlights India’s potential for further growth. “Economic uncertainty in 2024 created opportunities for agile VC firms to address gaps overlooked by traditional funds,” said Chirag Shah, president of fundraising and strategy at BlackSoil. Regional opportunities in tier-3 and tier-4 cities, as well as underexplored areas like the North-East, are additional growth avenues for these new VCs.
Emerging LPs, such as family offices and high-net-worth individuals, are also backing smaller, more agile funds. However, differentiation will be key to survival. “Firms that fail to offer a compelling edge – whether through sector expertise, founder networks, or operational value-add – may struggle to gain traction,” Sharma cautioned.
India’s digital public infrastructure, specifically the Unified Payments Interface (UPI), has transformed financial management for Indians. However, the dominance of foreign-owned companies, Google Pay and PhonePe, controlling 80-85% market share, has prompted a 30% market cap on UPI transactions. This aims to promote competition, innovation, consumer choice, and inclusivity in the UPI ecosystem.
