India’s startup base crosses 2.5 lakh; report highlights opportunities for emerging fund managers

New Delhi: India's recognised startup base crossed 2.5 lakh in October 2026, with more than half located outside metropolitan cities and emerging venture fund managers have a huge opportunity, a report said on Friday.

The report from Grant Thornton Bharat (GTBharat) and Indian Venture and Alternate Capital Association (IVCA) said domestic venture fundraising doubled to $5.4 billion in 2025, while seed-stage funding dropped 37 per cent in the first nine months of 2026 as the market becomes more selective.

The startup ecosystem is entering a phase where specialist venture fund managers will play a crucial role in identifying promising businesses and delivering stronger investor returns, it added.

The priorities that will help emerging managers deliver better exits and stronger returns for their limited partners (LPs) include a clear, research-led investment thesis, fund sizes matched to realistic exit outcomes, and disciplined reserves for follow-on rounds, according to the report.

They also include active support for portfolio companies as they scale and early planning for strategic sales, secondaries and IPOs.

Meanwhile, the report called for a stronger support system around new managers, including a dedicated pathway for first-time managers within the Rs 10,000 crore Startup India Fund of Funds 2.0.

These steps collectively can help emerging managers grow into trusted specialist funds that channel long-term capital into India's startup and innovation ecosystem.

“Emerging managers who build their investment thesis on rigorous research and independent conviction may face a tougher first fundraise, but they give themselves a better chance of succeeding over the long term. Before approaching LPs, managers should be able to demonstrate a clear investment strategy, differentiated sourcing and a pipeline of companies that fit the thesis,” said Amarjeet Makhija, Partner, Grant Thornton Bharat.

Anisha Singh, Founder & Managing Partner, She Capital; Executive Committee Member & Co-Chair, Emerging Managers Council, IVCA said that emerging managers play an important role in identifying new sectors, backing underserved opportunities and broadening the country’s investment landscape.

“The priority now must be to strengthen access to institutional capital, create more predictable pathways to liquidity and enable credible managers to scale beyond their first fund. A stronger emerging manager ecosystem is essential to the long-term depth and resilience of India’s private capital markets,” Singh added.