The Fund Manager’s Playbook: Building & Managing an Early-Stage Fund

The venture capital landscape in India has grown rapidly, with new funds emerging to support the next wave of high-growth startups. At LetsIgnite 2025, leading fund managers shared their insights and some hard-hitting truths on the art and science of building an early-stage fund, raising capital, navigating market cycles, and crafting an investment strategy that delivers consistent returns.

Raising the First Fund: Feel the Fear and Do It Anyway

For many emerging fund managers, securing the first fund can be daunting. It requires credibility, a strong network, and most of all, perseverance.

• Alok Goyal (Partner, Stellaris Venture Partners) shared how their first fund was raised largely from friends and family. They pitched to 1,200 potential investors before securing 100+ Limited Partners (LPs). Today, they work with just 20 global institutions, a testament to the consolidation of capital sources over time.
• Mohan Kumar (Managing Partner, Avataar Venture Partners) emphasized the importance of global LPs, noting that many Indian investors historically preferred consumer-focused and early-stage startups, necessitating a broader outreach.
• Anjali Sosale (Partner, WaterBridge Ventures) highlighted the professionalization of Indian LPs, crediting SIDBI’s role in fostering institutional investments in the venture ecosystem.

Weathering Market Cycles: A Tactical Approach

Private markets are inherently cyclical, with macroeconomic conditions influencing capital availability and investor sentiment. Leading fund managers at LetsIgnite 2025 shared their approaches to riding these cycles effectively:

• Arpit Beri (Partner, Jungle Ventures) pointed out that exposure to multiple markets, such as India and Southeast Asia, helps diversify risks and smooth out volatility.
• Apurva Salarpuria (Director, Salarpuria Group) shared their portfolio allocation strategy—60% investments into funds and 40% into direct startup investments—with a focus on consumer-driven themes.
• Mohan Kumar stressed that two-thirds of their team are operators—industry veterans who actively engage with portfolio companies. His firm takes an aggressive approach, ensuring every company in the portfolio has a pathway to success, as there’s no room for zombie investments in the current landscape. There is no set it and forget it

Understanding the Regulatory Landscape: The Role of SEBI and Institutional Support

India’s regulatory environment is evolving to accommodate the growth of venture capital and private equity. SEBI’s Alternative Investment Fund (AIF) regulations have streamlined investment structures, increasing transparency, and making it easier for Indian HNIs to participate in venture funds.

Notably, SIDBI’s (Small Industries Development Bank of India) participation in Indian venture funds has given credibility to many domestic funds, providing much-needed anchor capital that de-risks fundraising efforts.

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Key Takeaways for Emerging Fund Managers

1. Fundraising is a numbers game: The hard truth is that first-time fund managers must expect to pitch to hundreds of potential LPs before securing their first commitments.
2. Global outreach is key: While Indian LPs are maturing, global institutions remain a crucial source of capital, particularly for sector-agnostic or non-consumer funds.
3. Cyclical markets require diversification: Exposure to multiple geographies or a balanced mix of direct and fund investments could mitigate risk.
4. Active portfolio management is critical: Avoiding “zombie startups” requires hands-on support and operator-led teams who can guide founders through challenges. Mentoring is key.
5. Regulatory support is improving: SEBI’s AIF framework and institutional participation from bodies like SIDBI are making fund formation more accessible in India

Conclusion

Building and managing an early-stage fund in India requires resilience, strategic networking, and a deep understanding of market cycles. With Indian LPs becoming more sophisticated and global capital flowing into the region, there has never been a better time for fund managers to establish themselves. 

As demonstrated at LetsIgnite 2025, success in venture capital is not just about picking winners—it’s about raising smart capital, managing risk, and actively supporting portfolio companies.

For investors and fund managers looking to refine their strategy, the key lies in building strong LP relationships, adopting a global mindset, and committing to hands-on portfolio engagement.

Reach out to LetsVenture for more information and help.

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