India’s venture capital assets under management (AUM) are expected to reach 4.9 lakh crore rupees (US$58.8 billion) by 2025, nearly five times higher than a decade ago, according to a new report from Fibonacci X, a venture platform based in India.

The report attributes this growth to the rise of small domestic funds and an increase in local limited partners (LPs).

Funds with AUM below 400 crore rupees (US$48 million) are driving much of the new capital, with an average of 10 new funds over 300 crore rupees (US$36 million) launched each year for the past three years.

Returns remain concentrated, as only 48 out of 169 reviewed schemes delivered at least 50% back to investors, and top-quartile funds recorded a distributed-to-paid-in (DPI) ratio of 3x, compared to an industry average of 0.4x.

The share of domestic LPs in new funds rose to 39% in 2025, up from 20% in 2023.

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🔗 Source: Fibonacci X

🧠 Food for thought

1️⃣ India’s VC surge defies broader emerging market downturn

While most emerging markets experienced significant venture capital contractions in 2024, India bucked this trend with remarkable growth.

VC investments across emerging markets globally fell by over 40% in 2024, with regions like Southeast Asia and Africa seeing declines of 45% and 44% respectively2.

However, India’s VC funding surged to $13.7 billion in 2024, marking a 40% year-over-year increase and positioning the country as the second-largest VC destination in Asia-Pacific34.

This divergence demonstrates India’s unique resilience in attracting venture capital despite global headwinds, including rising interest rates and economic uncertainties.

The performance stands out even more when compared to the broader global VC landscape, where funding dropped from historic highs of $643-671 billion in 2021 to approximately $214 billion in 20235.

2️⃣ Five-decade evolution from government initiative to domestic capital dominance

The current dominance of domestic capital represents a complete transformation from India’s VC origins as a government-led initiative in the 1970s.

India’s venture capital history began with the R.S. Bhatt committee in the early 1970s, followed by formal government institutionalization in 1988 with restrictive guidelines that marked the industry’s humble beginnings6.

The industry evolved through four distinct phases over nearly five decades, starting as an underdeveloped sector with limited private participation until the IT boom of the late 1990s elevated VC’s profile76.

Today’s landscape shows a dramatic reversal: 39% of new funds now have fully domestic LP bases, up from just 20% two years earlier, with family offices writing 71% of direct startup investments1.

This shift from foreign-dependent funding to domestic capital leadership reflects India’s maturation into a self-sustaining venture ecosystem, reducing reliance on international market conditions and creating more locally-aligned investment strategies.

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