Indian venture capital (VC) firms have revamped an age-old strategy—follow-on investments. While it has been usual practice for funds to reserve capital to back portfolio startups that showcase potential or even set up new funds to support portfolio winners, recent trends suggest that more funds are accommodating growth investments within new funds.
For instance, deeptech-focused venture capital firm Speciale Invest, in August, closed its third fund with a target corpus of Rs 600 crore. The Agnikul Cosmos-backer is earmarking 50% of the fund to make follow-on investments.
According to Vishesh Rajaram, Managing Partner at Speciale Invest, this allows its portfolio companies to access capital over subsequent rounds. The trend echoes a common sentiment across the ecosystem—growth stage capital is favoured for only early-stage niche bets.
Other venture capital firms like Artha India Ventures are taking a page out of an age-old VC handbook and are launching separate funds to support winners from their portfolio. Also, Prime Venture Partners and Bessemer Venture Partners have made provisions to support promising portfolio companies in their most recent funds.
However, much of this capital still remains dry powder, as late-stage and growth-stage funding has been in the slow lane this year.
Year-to-date, only 162 companies have managed to raise growth capital, which includes Series B and Series C rounds, according to data from Tracxn. With only three months remaining in 2025, the question remains whether growth-stage funding will be able to catch up with last year’s numbers. In 2024, there were 276 Series B and Series C (growth-stage) deals.
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That said, this trend is well-timed as foreign investors take a step back from making bold bets, starving the Indian startup ecosystem of growth-stage capital.
For instance, SoftBank has taken a more cautious stance when it comes to its Indian investments. SoftBank’s last new investment in India was back in 2021 when it invested in Meesho as part of its $570 million funding round. It participated in a follow-on round in the IPO-bound company in March this year.
On the other hand, Tiger Global has stepped up exits and divestments in Indian companies. Since 2023, the firm has also slowed down its deal activity in the country, focusing on current portfolio companies and supporting them. The firm recently made several follow-on investments in EatClub and Meesho, among others.
Though few in number, global venture capital firms taking a back seat in Indian investments have widened a gap in the growth stage that other venture capital firms are looking to bridge by reserving a portion of their funds for follow-on rounds.
Edited by Kanishk Singh
