Sparrow Capital raises Rs 475 crore in third fund to bet bigger on early

Sparrow Capital raises Rs 475 crore in third fund to bet bigger on early-stage startups

Early-stage venture capital firm Sparrow Capital has raised Rs 475 crore ($50 million) for its third fund, increasing its firepower to back seed-stage startups at a time when investors are becoming more selective about early-stage bets, the company said on July 2.

Global investors accounted for roughly 60 percent of Fund III, including endowments, foundations, fund-of-funds and family offices, while the balance came from Indian family offices, HNIs, founders and operators.

The mix is a departure from Sparrow's earlier funds, which were predominantly backed by Indian LPs. It also mirrors a broader trend in India's venture ecosystem, where established managers such as Fireside Ventures are increasingly raising capital from global institutional investors alongside domestic backers.

Moneycontrol was first to report Sparrow Capital was in talks to raise around Rs 400 crore in its third fund in July 2025.

The latest fund marks a jump from Sparrow Capital's previous Rs 120 crore fund, its Fund II, reflecting growing investor confidence in the firm's early-stage investment strategy.

With the new fund, Sparrow plans to back 25-30 startups over the next three years, writing larger initial cheques of $1 million-$2 million (Rs 9.5-19 crore), an increase from $300–$500k (Rs 2-5 crore) earlier.

The firm said it has already made five investments from the fund and intends to lead or co-lead seed funding rounds. Moneycontrol reported Hulp, an AI concierge startup, was discussing a $4-6 million (Rs 35-60 crore) round with Sparrow, DeVC and others.

Founded in 2020, Bengaluru-based Sparrow Capital is a sector-agnostic seed-stage investor run by General Partners Yash Jain, Aakash Goyal and Darshit Vora.

Across its first two funds, the firm has backed more than 40 startups, including GoKwik, Apna Mart, Deconstruct, E6data, Gushwork, Furnishka, Aukera, StrainX, Superhealth, Homerun and Optimist.

The firm said it will continue focusing on seed-stage investments across sectors but expects to play a more active role in financing rounds by leading or co-leading deals.

The firm has also inducted Arpit Agrawal as chief financial officer and partner for Fund III. Agrawal previously held finance roles at fintech unicorn KreditBee and professional services firm PwC.

The fund close comes at a time when early-stage venture investing in India is showing signs of recovery after two years of muted activity. While fundraising has remained challenging for many domestic VC firms amid a weaker rupee and cautious global LP sentiment, established seed investors with demonstrated portfolio performance have continued to attract capital, particularly from overseas institutional investors.

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