Why India’s wealthy families are betting on startups as venture capitalists pull back

From real estate to technology, India’s affluent families are channelling more of their fortunes into startups through family offices as founders increasingly seek investors with a longer-term outlook.

Artha India Ventures is the investment firm of the family office the Damani family, who control Artha Group, an asset management firm. (Photo: Artha Group)

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MUMBAI: When the family behind Indian real estate developer Sattva Group decided to diversify its investments, it turned its attention to technology startups.

Adrija Agarwal - who graduated from Cornell University in the United States in 2016 and had worked at Bain & Company and Blackstone - spearheaded the creation of an investment platform for the family's interests, along with her younger brother Shivam.

In 2019, they formalised their family office. Such entities are set up to manage and invest the wealth of affluent families.

“We were sitting on a legacy of 'brick and mortar' excellence, but the Indian economy was rapidly digitising,” Adrija Agarwal, president of Sattva Group, based in the tech hub of Bengaluru, told CNA.

“We did not start this just to manage our family’s wealth, we started it to participate in India's consumption and tech narrative beyond real estate,” she added.

Tech-driven financial services company InCred and product discovery e-commerce platform Smytten are among the startups backed by Sattva's family office, which has invested more than US$100 million across private and public investments.

Sattva's strategy reflects a broader shift in India, where family offices are playing a more prominent role in startup investment.

Data from market intelligence platform Tracxn shows family office-backed funding in Indian startups almost doubled to US$1.62 billion in 2024 from US$876.70 million a year earlier. While funding declined slightly to US$1.48 billion in 2025, participation remained relatively resilient compared with the broader venture capital slowdown.

Tracxn’s figures show funding by Indian venture capital (VC) firms in Indian startups fell by nearly 80 per cent to US$6.71 billion in 2025 from US$31.40 billion in 2021. Global VC funding into Indian companies also fell, dropping to US$7.62 billion from US$34 billion over the same period.

Analysts said domestic family office capital is gaining significance at a time when global investment flows have become more volatile amid geopolitical tensions, greater investor selectivity and as founders seek investors willing to take a longer-term view.

“Family office capital is becoming more strategically relevant,” said Falguni Shah, Partner, Leader of Entrepreneurial and Private Business, at consultancy firm PwC India.

Sahil Anand, founder and managing partner of Indian VC firm Cedar Hill Capital, said recent geopolitical disruptions, namely the US and Israel's war with Iran, had reinforced the importance of developing domestic pools of capital.

“The war has taught us that you cannot be too dependent on these relationships beyond a point because of geopolitics,” Anand told CNA. “It’s taught us the value of having these self-sustaining family office funds.”

WHY INDIA’S FAMILY OFFICES ARE BACKING STARTUPS

Family businesses have long been the backbone of India's economy.

Industry insiders said an expanding economy, mounting wealth, generational change, and the rapid rise of technology businesses have encouraged wealthy families to look beyond traditional assets such as gold and property in search of new avenues for growth.

Catamaran Ventures, the family office of Indian IT giant Infosys co-founder Narayana Murthy, and Premji Invest, the investment arm of the family of Azim Premji, founder of IT firm, Wipro, are examples of long-established family offices.

The number of structured family offices in India surged to 300 in 2024 from 45 six years earlier, according to PwC's research.

“Business-owning families increasingly see startups as a way to access innovation, move into related areas of business and future relevance,” said PwC’s Shah.

“Domestic family office capital matters more for Indian startups because it is more relationship-led and more willing to back businesses through longer development cycles,” Shah explained.

Family offices investing in India’s new tech businesses are growing as younger business leaders take a more active role in managing family wealth - like in the case of Sattva - and startups become a more attractive investment option.

“Talking about which startup you have equity in and which company of yours has become a 'Unicorn' (a company valued at over US$1 billion), the startup world is glamorised,” said Cedar Hill Capital’s Anand.

Prominent Indian startups, including food delivery app Zomato, have listed on Indian stock markets, demonstrating the scale such companies can achieve. Zomato’s share price has more than doubled since its 2021 market debut.

“We saw the first phase of the family office boom coming in post-Covid where there was a lot of liquidity, a lot of free time, so everyone started coming up with their own family offices,” Jashank Pohani, head, family office relationships at Artha Group, told CNA.

Artha India Ventures, set up in 2012, is the investment firm of the family office of Ashok Kumar Damani - who built his wealth through stockbroking and real estate - and his son Anirudh Damani.

The family office moved relatively early to invest in the country's budding startup scene.

Pohani explains that four years after the family office was established “we got our first taste of blood with an exit”.

It sold its investment in Oyo, an Indian hotel chain driven by a technology platform, with a return of almost 200 times on its capital invested.

“That was one of the first few angel (investor) exits that India had seen,” said Pohani. “Before that we would only hear about angel investors investing in startups, not about how they were actually making money.”

Angel investors are individuals who invest their own money in early-stage startups. An exit refers to the point at which an investor sells their stake, often through an acquisition, share sale or public listing, and cashes in on their investment.

“This exit put us on the map and we started to get a lot more startup investment opportunities ... A few family offices came to us and said 'hey, let's do this together',” Pohani explained.

In 2019 Artha set up a fund which allowed other family offices to join forces with it to invest into startups.

Neha Singh, co-founder of Tracxn said family offices are often seen as investors with “patient pools of capital” - capital invested that does not need to be returned quickly.

Unlike many VC firms - which usually raise funds from private equity firms and financial institutions and are expected to invest that money, grow it, and return profits within an eight-to-ten year lifecycle - family offices often have more flexibility.

This means they may be able to stay invested for longer and engage with startups more patiently, Singh explained.

That can be especially useful at a time when VC firms become more cautious and selective about where they put their money, she added.

Some Indian founders said that family offices are offering a much-needed alternative pool of capital.

“The family office has been really helpful for us,” said Abhinav Sinha, co-founder of SportsSkill, a sports performance tracking app, which raised investment from KP Balaraj's family office twice, in 2024 and 2025.

He points out that startups can gain other advantages if they find the right family office. KP Balaraj was the co-founder and managing director of WestBridge Capital and, before that, a national tennis player.

“KP Balaraj understands sports, so it was easy for him to understand what we were doing, so that's a big advantage,” said Sinha.

“As founders today, we realise that a lot of family offices actually represent operator capital as well as patient capital - and that's why we really value them being part of our journey,” serial entrepreneur, Naiyya Saggi, told CNA.

Operator capital refers to funding from those experienced with running a business, who can offer startups advice, networks and industry know-how, beyond just money.

Saggi is the founder and CEO of consumer tech and home appliances startup, EDT (Everyday Design & Technology), previously the founder of BabyChakra, a parenting and pregnancy online platform, and also co-founded direct-to-customer beauty commerce startup Good Glamma.

WHERE STARTUP INVESTING GETS CHALLENGING

Family offices are still evolving - and that brings some hurdles.

“The first challenge is alignment within the family: getting different generations and branches (of a family) aligned on the purpose, risk appetite, liquidity expectations and decision rights,” said PwC's Shah.

“The second is succession and governance,” she said, referring to the rules and structures that guide investment decisions, risk management and dispute resolution.

Some family offices have been burnt when making deals, Pohani pointed out.

Pohani said some founders target family offices with investment opportunities because certain newer family offices may conduct less rigorous due diligence processes than established venture capital firms or institutional investors.

He cited BluSmart, an Indian electric ride-hailing service and rival to Uber, as a prime example of this. Pohani said institutional investors had largely avoided investing in it and many of its investors were family offices.

The startup suspended its operations in April last year two days after India’s stock market regulator alleged that its co-founder misused funds.

Industry experts insist family offices are complementing, rather than replacing VC firms.

“A good VC is still very valuable - it brings institutional discipline, follow-on capital, global networks and experience with scaling companies,” said Sattva Group’s Agarwal.

“What I think has changed is that founders are thinking more carefully about the mix of investors. Some want VC capital. Some want strategic investors. Some want family offices.”

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