Why Indian Family Offices Are Pouring More And More Money Into VC Funds

INDIAN MONEY IS COMING IN A BIG WAY AND WITH A LOT OF CONFIDENCE AND COURAGE, SAY VENTURE CAPITALISTS

- BY S SHANTHI

For many years, India's venture capital (VC) firms have been predominantly backed by global offices. However, today, the tables have turned. VC firms are seeing a huge percentage of capital coming from Indian family offices in their recent funds. The second-generation entrepreneurs of these offices have become more active as limited partners (LPs). A case in point is Blume Ventures, which recently closed its largest India-dedicated fund at $250 million. The firm told us in an exclusive interview that this time around 40 per cent of the capital came from Indian LPs.

Kae Capital also has a similar story. The firm, which closed its third fund recently, to invest in healthcare, financial service, consumer products, business products and service sectors, saw 50 per cent of the money coming in from Indian family offices. Sasha Mirchandani, founder and managing director of Kae Capital asserts that not only is he seeing a dramatic change and a huge part of the money coming into India between last quarter and now, but these investors are also more actively involved.

“They ask the right questions, they have picked up on speed and they understand the asset class much more than earlier. It is mostly the second generation that is today running these family offices. They are very competent and put large cheques into our funds,” said Sasha. He is also very confident that if the firm shows results, more money will be poured in.

Indian family offices and ultrahigh-net-worth individuals (UHNIs) have been the 'top source for domestic capital in the VC ecosystem'. They accounted for nearly 60 per cent of domestic capital raised in 2021, says the sixth edition of Innoven Capital's 'Early Stage Investments Insights Report - India'.