This publication talks to an India-based firm focused on venture capital investments into the country. VC funds are growing rapidly in India.

Venture capital is the best way to play India’s growth story, expected to expand by 6.8 per cent this year and on course to be the third largest economy in the world by 2030, an investment firm says. 

New Delhi-based Rukam Capital – a firm founded in 2019 – is something of an evangelist about venture capital and argues that it fills a gap in early-stage funding in the country’s startup ecosystem.

Rukam Capital is in the process of raising money for its second fund – “Rukam Sitara” – aiming at a target size of $50 million. At its first close, it achieved $19 million. There is a pipeline of five startups; the sectors targeted are generative AI, deep tech robotics, semiconductors, software-as-a-service, and climate tech. 

The first fund, which has a size of $19 million, was set up to invest early in consumer products and services companies. Its largest sector allocation, in percentage terms, is food and beverages (56 per cent), followed by beauty and personal care (18 per cent), and then by home and kitchen (15 per cent).

“India now has the third largest startup ecosystem in the world and that is fuelled by venture capital investment. So, it is VC investment that ultimately helps to drive Indian growth, which means that VC investment is a compelling way to participate in the growth story,” Archana Jahagirdar, founder of Rukam Capital, told this news service. 

The pace of venture capital growth in India has been rapid: between 2020 and 2022, the number of “unicorns” (startups valued at $1 billion plus) trebled to more than 100 and the number of startups increased by over 50 per cent to 57,000 with a combined valuation of more than $450 billion. The number of startups in India rose from 57,000 to 68,000 last year. The number of unicorns has also continued to grow.

According to Preqin, a firm tracking alternative investments such as VC, private equity and credit, fundraising remained robust in India despite a slowdown in activity in 2022, hitting a figure of $68 billion. “With strong growth prospects and more global investors looking for new opportunities, India's private equity and VC markets are set to keep expanding,” Preqin said in its report. 

VC is Jahagirdar’s passion. Before she founded Rukam Capital, Jahagirdar contributed to deal sourcing, set up an accelerator, and collaborated with the Indian Angel Network. In all, she has more than two decade’s experience on the clock. Achievements include bringing and organising New Delhi Slush’d, India’s licensed avatar of the world’s largest founder-focused event, Slush Helsinki.

Besides Jahagirdar, other prominent figures at the Rukam Capital business are Tarun Pal, chief financial officer; Aditya Vikram Singh, vice president, investments; Varun R Nair, director, investments; Deepak Bansal, VP, finance and accounts; Karan Sethi, manager, investments, and Nidhi Mundhra, VP, finance.

Tech and consumer spaces are particularly compelling right now, Jahagirdar said. 

“India’s growth is digitally led. Between 2018 and 2023 the number of internet users in the country increased from 398 million to 907 million, growing from 29 per cent of the total population to 64 per cent. There are now nearly a billion mobile phone users in India, more than two-thirds of the total population, and Indian tech firms are world famous,” she said. 

Deloitte has given India’s tech space its thumbs up. In a recent report on Indian tech trends, the accountancy giant and consultants said: “India stands out as a hub of innovation and opportunity in a constantly changing landscape, where tradition and modernity converge to create a vibrant ecosystem full of possibilities.”

As for consumer spending, it is set to double by the end of this decade. Large rises of wealth in India are powering equally rapid growth in the consumer sector.

Jahagirdar said she founded the firm after having learned mistakes with a startup she had in the visual arts space and had no available capital. “This in turn meant that my business had no escape velocity. And during that time, I met up with a lot of people who were either trying to start their own ventures or were investors and it became clear to me that this was a space where I could be a meaningful participant in the India growth story,” she said. 

Within its first fund, 90 per cent of portfolio companies have revenue growth of more than four times since Rukam’s initial investment; 42 per cent of the firms have chalked up revenue growth of four to seven times; a quarter have witnessed growth of more than 10 times. 

This news service has carried several articles about India and its investment story. See examples here and here.