Startup companies need a certain amount of investment for growth. Wealthy investors like to invest their capital in businesses with long-term growth in view. This capital is known as venture capital and the investors are called venture capitalists. The venture capital investment is made when a venture capitalist buys shares of companies and becomes a financial partner of their business.
The data recorded at the end of Q3 2019 states that the top 10 most active Venture Capital firms in India alone contribute to 32% of the total deal count in the startup ecosystem. The Venture Capital investment is often termed as risk capital or patient capital. This is because most VC investing capitals or rather a majority of them harbor tremendous risks of parting from the money invested if the venture doesn’t succeed. Besides, the capital coming from venture capital firms or VC funds usually needs a medium to long-term period for the investments to fructify.
The Indian startups secured over $12.1 billion from the venture capital funds in the first 6 months of 2021, which is $1 billion more than the overall funding that they received last year. Venture Capital (VC) investment in India more than doubled from its previous quarterly high of $6.7 billion in Q2 2021 to $14.4 billion during Q3 2021, according to a recent report by KPMG.
In the year 2021, the Indian startups have successfully managed to mop up $36 bn worth of funds and most of them came from the VC funding for startups and private equity investments, which increased by 3X from the earlier year. These funds are not only helping the startups find it easier to raise funds but are also adding gear to the Indian startup ecosystem, thereby making it a prominent and growing entity in the global landscape.
Citing information from Venture Intelligence, the total investments in the first half of 2023 stood at $3.8 billion, which is divergent from the substantial figure of $18.4 billion seen previously.
Top VC Firms in India –
- Peak XV Partners
- Accel
- Blume Ventures
- Elevation Capital
- Tiger Global Management
- Kalaari Capital
- Matrix Partners
- Nexus Venture Partners
- Indian Angel Network
- Omidyar Indian Network
Features of Venture Capital Investments
Methods of Venture Capital Financing
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Peak XV Partners
| VC Firm | Peak XV Partners |
|---|---|
| Founder | Donald T. Valentine (Sequoia Capital) |
| Founded in | 2000 |
| Deals | 415 |
| Notable Investments | JustDial, Knowlarity, Practo, iYogi, bankbazaar.com |
| Key Sectors | Fintech & Enterprisetech |
| Stage | Early Stage Venture, Late Stage Venture, Seed |
| Website | Peakxv.com |
Sequoia India & Southeast Asia has undergone a rebranding process and emerged as Peak XV Partners. Sequoia Capital the parent organization of Peak XV Partners is an American venture capital firm, headquartered in Menlo Park, California. Sequoia invests in both public and private companies. Sequoia Capital has invested in over 1000 companies since 1972, the list of which includes big names like Apple, Google, Oracle, Nvidia, Github, and more. It is mainly focused on the technology industry. Peak XV Partners has invested in companies such as JustDial, Knowlarity, Practo, iYogi, and bankbazaar.com. It has assets worth $5.4 billion under management in India and it is spread across seven funds.
Every six months, Sequoia shortlists 15 to 20 startups for each cohort and provides a capital investment of $1 Million to $2 Million with participation from other investors.
About Venture Capital
Accel
| VC Firm | Accel |
|---|---|
| Founder | Jim Swartz, Arthur Patterson |
| Founded in | 1983 |
| Deals | 322 |
| Notable Investments | Freshworks, Swiggy, BlackBuck, Bounce, BookMyShow, Flipkart |
| Key Sectors | Enterprisetech |
| Stage | Early Stage Venture, Late Stage Venture, Seed |
| Website | Accel.com |
Accel, formerly known as Accel Partners, is an American venture capital firm based out of Palo Alto, California, US. The company has its offices in Palo Alto and San Francisco along with operating funds in India, China, and London. Some of the major companies that Accel has funded over the years are Facebook, Flipkart, Atlassian, Slack, Spotify, Etsy, and more.
Accel currently has assets of more than $1.6 billion under management. It has closed nearly six funds in India. The company’s portfolio of funding Indian businesses includes names like Flipkart, Swiggy, Blackbuck, Cure.fit, and more. The firm’s growth capital investments focus on more developed companies that require a larger amount of capital to expand their business.
Accel secured a substantial sum of $650 million in 2022 for its seventh fund, known as Accel India VII. This fund supported early-stage startups in both India and Southeast Asia.
During the first quarter of 2023, the VC firm actively engaged in 12 investment deals with promising startups. Among the recipients of their investments were Zypp Electric, Kratos Studios, Rigi, and Brick&Bolt. Notably, Accel took part in a total of 48 investment deals over the course of 2022.
Accel is a venture capital firm that concentrates on the following technology sectors: Consumer, Infrastructure, Media, Mobile, SaaS, Security, Customer care services, Enterprise software, and E-commerce.
Blume Ventures
| VC Firm | Blume Ventures |
|---|---|
| Founder | Karthik Reddy and Sanjay Nath |
| Founded in | 2010 |
| Deals | 228 |
| Notable Investments | Dunzo, Unacademy, Instamojo, Procol, HealthAssure, Milkbasket |
| Key Sectors | Fintech & Enterprisetech |
| Stage | Early Stage Venture, Seed |
| Website | Blume.vc |
Blume Ventures is an early-stage and seed-stage venture fund that has its headquarters in Mumbai, Maharashtra, India. The company was founded in 2010 as a venture capitalist firm that aims to improve startup financing in India. Blume Ventures primarily focuses on tech companies. The company launched its first micro-VC fund in 2011, becoming the first institutionalized early-stage investor at that time.
Blume Ventures raised a $41 Million opportunity fund in 2020, which was one of the largest domestic opportunity funds among the Indian venture capital funds designed to invest in best-performing portfolio companies. From this fund, Blume has invested in Series B to D rounds in firms like Unacademy and Servify. The company had nearly three other funds the last one was $102 Million before the COVID-19 pandemic in India. The VC firm has nearly $225 Million in total capital under management. Blume Ventures boasts of managing capital amounting to more than $280 million and has backed 150+ startups.
During the year 2022, the venture capital fund successfully concluded a funding round, securing a total of $250 million for its operations. This enabled them to support 31 Indian startups, notable among them being Lambdatest, Pixxel, and Jai Kishan, an agritech startup.
During the first quarter of 2023, Blume Ventures engaged in funding rounds for 20 startups, providing investments to notable companies including ApnaKlub, Virohan, ElectricPe, and Aerem.
Ria Puneyani
Elevation Capital
| VC Firm | Elevation Capital |
|---|---|
| Founder | Andrew Yan |
| Founded in | 2001 |
| Deals | 170 |
| Notable Investments | Capital Float, Firstcry, Swiggy, IndustryBuying, Aye Finance, Rivigo, Cleartax |
| Key Sectors | Fintech |
| Stage | Stage Agnostic, Private Equity |
| Website | Elevationcapital.com |
SAIF Partners rebranded as Elevation Capital on October 20, 2020, is a stage and sector-agnostic private equity firm in Asia. The firm is headquartered in Gurugram, Haryana, India, and aims to make minor investments in seed-stage, early-stage, and later-stage companies. Elevation Capital (formerly known as SAIF Partners) was started as Softbank Asia Infrastructure Fund (SAIF) in 2001 with a $400 Million fund where Cisco Systems and Softbank Group were the sole limited partner.
When Elevation Capital started as SAIF Partners, it was headquartered in Hong Kong and was focused on China, India, Hong Kong, and Taiwan. In India, the venture capital firm has offices in Bengaluru and Gurugram. Elevation Capital had already invested in the early stages of companies like FirstCry, Just Dial, MakeMyTrip, Meesho, Paytm, ShareChat, Swiggy, and more. The firm has doubled its investment in Indian firms in 2020 into new segments like edtech, health tech enterprise software-as-a-service (SaaS), entertainment, and direct-to-consumer startups.
Tiger Global Management
| VC Firm | Tiger Global Management |
|---|---|
| Founder | Chase Coleman III |
| Founded in | 2001 |
| Deals | 221 |
| Notable Investments | Urban Company, Flipkart, Moglix, OPEN, Ninjacart, Razorpay |
| Key Sectors | Fintech |
| Stage | Growth, Late Stage, Private Equity, Post- IPO |
| Website | Tigerglobal.com |
Tiger Global Management LLC operates as an investment firm that is focused on public and private companies in the global Internet, software, consumer, and financial technology industries. The mission is to generate world-class investment returns over the long term. It builds a unique, global investment platform. They invest in high-quality companies that benefit from powerful secular growth trends and are led by excellent management teams.
Tiger Global Management was founded in 2001 and is headquartered in New York, US, and is one of the most global investors in Indian startups that has started investments of around $300 Million. It has backed more than 13 companies, including a $90 Million round in agri-tech startup Ninjacart and a $60 Million infusion in B2B industrial goods marketplace Moglix in the first half of FY19.
The company is said to have invested in more than 442 companies across the globe with 7 designated funds. It has also witnessed 64 exits since its inception in 2001. In India, this VC firm has invested in more than 97 startups. Tiger Global is reported to have raised the highest amount of capital amongst venture capital firms between 2007 and 2017. In 2020, Tiger Global helped its investors earn around $10.4 billion, which is more than any other hedge fund on the annual list of London fund-of-funds firm LCH Investments’ top 20 managers.
Razorpay had been among the companies, which includes Urban Company, Flipkart, Moglix, and more that Tiger Global Management had invested. In the first half of 2019, Tiger Global Management made its founder, Coleman, the top-earning US hedge fund manager in 2020 where the company had mopped in around $3 billion in fees and gains on investments.
In mid-2022, Fund 15 concluded its fundraising with an impressive total of $12.7 billion, showcasing a significant growth of 2 times compared to the 16th equity fund announced in October.
In June 2023, Tiger Global successfully secured $2.7 billion for its new fund, though it fell below its initial target of $6 billion.
Alan Joseph
Kalaari Capital
| VC Firm | Kalaari Capital |
|---|---|
| Founder | Vani Kola |
| Founded in | 2006 |
| Deals | 149 |
| Notable Investments | Cashkaro, Cure.fit, WinZO, Jumbotail, Milkbasket, Myntra, Snapdeal |
| Key Sectors | E-commerce |
| Stage | Early Stage |
| Website | Kalaari.com |
Kalaari Capital, founded in 2006 in Bengaluru by Vani Kola. It focuses on technology-related companies in India. Till now it has made more than 92 investments across 3 funds and witnessed more than 15 exits from companies like Myntra and Snapdeal. It has also made a partial exit from Zivame.
Kalaari Capital manages $650 Million in assets under management. It boasts of a strong advisory team in Bangalore investing in the early stage. Kalaari is passionate about investing in entrepreneurs who are poised to be tomorrow’s global leaders. This firm had funded $290 Million in 2015, which was the largest fund by an Indian VC at that time.
Matrix Partners
| VC Firm | Matrix Partners |
|---|---|
| Founder | Paul J. Ferri |
| Founded in | 1977 |
| Deals | 168 |
| Notable Investments | Avail Finance, Vogo, DailyNinja, Stanza Living, MoEngage |
| Key Sectors | Fintech & E-commerce |
| Stage | Early Stage Venture, Seed |
| Website | Matrixpartners.in |
Matrix Partners is a US-based private equity investment firm focused on venture capital investments. The firm invests in seed and early-stage companies in the United States and India. It mainly concentrates on the software, communications, semiconductors, data storage, Internet, or wireless sectors. Matrix has invested in Apple Computer, Alteon WebSystems, and Office Club. It is said to have nearly $1 Bn as assets under management (AUM). The company has invested in more than 549 companies throughout the world with its second fund. Online gaming platform Zupee raised $10 Million in a funding round led by US-based growth equity firm WestCap Group and existing investor Matrix Partners India.
The firm has also noted 120 successful exits from companies like HubSpot and Oculus. The firm entered India back in 2006 under the leadership of general partners Avnish Bajaj and Rishi Navani.
Nexus Venture Partners
| VC Firm | Nexus Venture Partners |
|---|---|
| Founder | Sandeep Singhal |
| Founded in | 2006 |
| Deals | 137 |
| Notable Investments | WhiteHat Jr, Delhivery, Rapido, Unacademy, Druva, Jumbotail, Bolo App, Pratilipi, Zomato |
| Key Sectors | Enterprisetech |
| Stage | Early Stage Venture, Seed |
| Website | Nexusvp.com |
Nexus Venture Partners was founded in 2006. Silicon Valley and Mumbai-based venture capital firm, Nexus Venture Partners is the first India-US venture fund. The company has grown to be a popular venture capitalist firm that has helped a list of companies to raise funds like WhiteHat Jr., Rapido, Delhivery, Zomato, and more.
The firm makes investments in early-growth stage companies with an average ticket size of $500K-$10 Million. The firm had raised $100 Million in its first fund. It is said to have more than $1.4 Billion in assets under management as of FY 19. The firm has invested in over 100 startups such as Zomato, Snapdeal, Delhivery, Goodera, etc. Its successful exits include Gluster, Gitter, ElasticBox, and MapMyIndia among others.
By March 2023, Nexus Venture Partners had successfully raised a total of $2.6 billion in funding in a span of seven funds.
Indian Angel Network
| VC Firm | Indian Angel Network |
|---|---|
| Founder | Saurabh Srivastava, Padmaja Ruparel, Raman Roy |
| Founded in | 2006 |
| Deals | 189 |
| Notable Investments | WebEngage, Wow! Momo, Druva, Box8, Faballey, Little Black Book |
| Key Sectors | E-commerce & Agriculture |
| Stage | Early Stage, Seed |
| Website | Iangroup.vc |
Founded in 2006, in New Delhi, India, Indian Angel Network (IAN) is a group of primarily Indian angel investors funding early-stage startups. The group had 450 members from 11 countries in 2017. Indian Angel Network, India’s first and Asia’s largest angel network brings together successful entrepreneurs and CEOs. The group has invested in companies, such as PregBuddy and SuperProfs. In 2018, one of its founders Padmaja Ruparel was ranked amongst Fortune (magazine)‘s list of The Most Powerful Women in India.
On Nov 8th, 2020, the Indian Angel Network (IAN) announced the joint with Bangladesh Angels Network (BAN). The aim is to work together to source, cross-refer, and promote linkages in technology-enabled startups in India and Bangladesh to create an enabling environment for venture investing in both ecosystems. IAN is a SEBI-registered early-stage fund with more than 470 investors from around 11 countries. It aims at investing up to $1 Million, with an average ticket size of about $400K-$600K.
By October 2022, Indian Angel Network had successfully raised a total of ₹20.5B billion in funding in a span of four funds.
Omidyar Indian Network
| VC Firm | Omidyar Network India |
|---|---|
| Founder | Pierre Omidyar |
| Founded in | 2004 |
| Deals | 360 |
| Notable Investments | Dailyhunt, Indifi Technologies, 1mg, Needslist, Bounce, Platzi, Pratilipi, Healthkart, Doubtnut, ZestMoney, WhiteHat Education Technology |
| Key Sectors | Fintech & Education |
| Stage | Early Stage, Seed Stage |
| Website | Omidyarnetwork.in |
Omidyar Network India was founded in 2004. Omidyar Network India is an investment firm focused on social impact. The company looks to invest in startups that are helping to build more inclusive and equitable societies for the benefit of many. It provides grants to nonprofits in the areas of digital identity, education, emerging technologies, financial services, and more. The company started ReSolve Initiative, which is designed to invest in building solutions for two long-standing themes – MSMEs and migrant workers. The initiative will look to entrepreneurs, thought leaders, and policymakers to come together to reframe and resolve the issues plaguing these areas.
It has invested over $300 Million into the Indian startup ecosystem. The company has also decided to invest an additional $350 Million (INR 2486 Cr) in the upcoming five years. By this investment, the social impact investment firm also wants to target 500 Million individuals, who have just started using smartphones.
Features of Venture Capital Investments
- High-risk investment
- High Tech projects
- Participation in Management
- Length of Investment
- Illiquid Investment
Methods of Venture Capital Financing
- Equity financing – Equity financing is the raising of funds by selling the shares of the company. Sometimes companies need money for short-term or long-term investments and the sale of shares proves beneficial in the way that they simply sell their shares or the ownership of the company in return for cash
- Participating debentures – This is the form of raising capital from venture capitalists and other companies in different phases with varying interest rates. Here, the initial seed round comes without any interest, however, the successive rounds, as the startup grows, are chargeable at increasing interest rates.
- Conditional loan – Conditional loans are another way of raising funds that do not carry interest. These loans can be availed by startups and other companies to meet their funding needs but they need to be repaid to the lender in the form of royalty once the company starts making revenue. The rate of royalty varies from (2-15)% based on several factors like the gestational period, external risk, and more.
- Income note – Income notes can be categorized under hybrid financing that is similar to traditional and conditional loans in characteristics when combined. In this form of a fund raised the company for which they have to have both royalty and interest but at comparatively lower rates.
- Convertible loans – Going by the term, “conditional” loans are the loans that are provided to startups and other business ventures on the condition that if the loan amount is not paid within a stipulated time they can then convert the same into equity.
The venture capitalist provides the funding knowing that there’s a significant risk associated with the company’s future profits and cash flow. Capital is invested in exchange for an equity stake in the business rather than given as a loan.
Manav Makhija
FAQs
What is a Venture Capital investment company?
A venture capital investment company is an investment firm that invests in startups and mentors them for their growth. Venture capital firms are generally made up of well-off investors, investment banks, and other financial institutions.
How many Venture Capital firms are there in India?
There are over 800+ venture capital firms in India, as of 2022.
What are the top Venture Capital firms in India?
Some of the top Venture Capital firms in India are:
- Peak XV Partners
- Accel
- Blume Ventures
- SAIF Partners
- Tiger Global Management
- Kalaari Capital
- Matrix Partners
- Nexus Venture Partners
- India Angel Network
- Omidyar Network India
What are Corporate Venture Capital funds?
Corporate Venture Capital funds can be defined as the corporate funds that the Corporate Venture Capital firms invest directly in the external startup companies.
To list some of the top corporate venture capital firms:
- Brand Capital
- Amazon and Amazon Alexa Fund
- Google and Google Ventures
- Unilever Ventures
- Samsung Ventures
- Intel Capital
- Microsoft
- Bain Capital Ventures
- Reliance Capital
- Mahindra Partners
- Experian Ventures
- Lodha Ventures
How to raise venture capital for a tech startup?
If you are looking to raise venture capital for a tech startup that is on your mind, then here are some decent ideas that you can go for to raise some venture capital:
- Set out with a powerful business idea
- Make a unique and foolproof business and revenue model
- Make a list of the criteria for getting funds from a specific list of venture capitals
- Know your venture capital firms
- Prepare your pitch
- Reach out to prominent venture capital firms politely and confidently
- Speak well and support your statements with research data
- Communicate your ideas clearly
- Establish your value propositions well
- Wait for the results
What are early stage VC firms?
The early stage VC firms are the venture capital firms that are typically known to support startup businesses in their earlier stages of growth. These stages also include the beginning phase when the projects are still in the market research and development stage.
