Global LPs are Growing Wary of Helicopter VCs, Say Siddarth and Pranav Pai

Pranav: When I met a lot of founders, my first surprise was that they all hated raising venture capital. They felt VCs were very robotic. There were only seven or eight business models that the VCs were interested in such as food delivery, ride-hailing or payments. If a founder was doing anything outside that set, they didn't even get a meeting.

That made it clear to me: India needed Indian VCs who were operators. People who had built companies and could actually help founders grow, not just write cheques.

Pranav: Every Indian VC had to start with domestic LPs because first-time managers have to build local support in any market. So we first raised from Indian institutions, family offices and corporations. As a result of the returns that we have shown, there is a lot more interest in India now from global LPs. We've raised from American university endowments, European investors, Japanese investors and Singaporean LPs.

The same kind of investors that global firms raise from—we have access to maybe 50–60% of those today. What we don’t have access to at the same level are other nationalities' family offices, pension managers or sovereign LPs and state pension programmes.

Siddarth: Global LPs are also growing wary of ‘helicopter VCs’—those who drop in from Singapore, London or New York attend a few events, praise UPI [Unified Payments Interface], pose for photos and fly out. India doesn’t work like that. You need tribal knowledge, networks, constant conversations to sense what’s happening. These are unlisted assets, you don’t get analyst reports. Being on the ground is non-negotiable.

Pranav: More money came into the ecosystem, and India-first companies emerged. Start-ups began solving real India-first problems across SaaS [software as service], deep tech, drones, manufacturing etc.

This cycle also involved much more Indian participation: Indian GPs, Indian LPs, family offices, corporations and banks. Many of these firms are now going public or raising large growth rounds.

Pranav: Generally, everyone charges the same. But we’re the exception. We cut our fees because we think they’re too high for India, where capital is scarce. Here’s the problem: if Fund X raises ₹100, after fees and overheads only about ₹80 gets invested. The rest goes into expenses—flying first class, hosting large events. We don’t believe in extravagance.

So when a company compounds 100x—from $10mn to $1bn—our LPs benefit far more because more of their capital went into the investment. Founders benefit when we can support them over more follow-on rounds. For us, it’s simple: our primary objective is compounding. We’re not here to become influencers or write blogs. Every decision is about maximising the probability of compounding returns and delivering value to founders.

Siddarth: For the longest time, the government showed a preference for listed market investments over the unlisted market. At one point, unlisted investments attracted 2.36x the tax compared to listed, once you accounted for all surcharges. So, it hurt the appetite for investing in PE/VC funds and effectively this made it harder for us to compete against the stock market for money from family offices and HNIs [high-net-worth individuals].

Now, thankfully, after a substantial amount of effort from the industry side, the government has rationalised the tax rate between listed and unlisted.

Siddarth: With a local AIF [alternative investment fund], the manager is Indian, the knowledge, gains and taxes stay in India, and reinvestment happens here. That's sticky capital. Foreign investors pay tax here but then take profits abroad.

Also, you can’t understand India by copy-pasting a US or China thesis. You need local judgment, networks and the ability to spot opportunities others can’t.

Siddarth: India still blocks institutional pools of capital from meaningfully investing in AIFs. Charitable institutions are regulated as trusts under the Income Tax Act. So IIT Delhi’s endowment, for instance, can’t invest in VC funds.

RBI had banned banks from investing in AIFs if they have exposure to even a single rupee of debt in a portfolio company, which has now changed. Insurance firms can't invest in AIFs that invest overseas, despite being excused from such investments.

Unless artificial regulatory friction stops preventing Indian institutional capital participation in AIFs, we will never have an atmanirbhar start-up ecosystem.