Author: Sai Keerthi
India—the third-largest startup ecosystem—stands on the shoulders of venture capital (VC) firms that make bold investments and back passionate founders to ring in the next startup success story.
While the country has been reeling from a funding winter, which lasted from 2023 to 2024, the VC ecosystem has corrected its course and is in a phase of disciplined maturity. Last year, Indian startups raised $11 billion—the lowest since 2020—with VCs writing fewer but larger checks, signalling a cautious and selective approach.
In 2025, many VCs also raised new funds, albeit calling for greater participation from domestic institutional investors. “India has strong founder talent and operating depth, but long-term domestic pools like insurance and pension capital remain underrepresented at later stages. Enabling this participation through calibrated frameworks would strengthen capital continuity and reduce over-reliance on any single source of funding,” noted Navin Honagudi, Managing Partner at Elev8 Venture Partners.
Echoing a similar sentiment, Kunal Khattar, Founder at mobility-focused fund, AdvantEdge, noted that policies should be rolled out to reduce reliance on foreign VCs, and that the government should create stronger incentives for insurance and pension funds to invest in SEBI-registered Alternative Investment Funds (AIFs).
Continue reading: yourstory.com/2026/01/indian-venture-capital-vc-policies-domestic-capital-union-budget