As per data from Indian Venture and Alternate Capital Association (IVCA), there are more than 250 active micro-VC funds now in the country, compared with around 200 in 2024.
Micro VCs are early-stage vehicles with fund sizes ranging from as low as Rs 50 crore to a maximum of Rs 250-300 crore. These firms, which typically back startups that are in the pre-seed, seed and early Series-A stage and are single partner-focused, have added to the diversity of risk-capital investing in Indian startups. Micro-VC managers say the smaller fund size helps them stay close to their portfolios, make more concentrated bets and achieve meaningful returns without depending on billion-dollar exits.
Several micro VCs have launched or raised fresh capital in 2025, reflecting the growing appetite for niche investment vehicles. Among them, 247VC has secured Rs 50-60 crore in its first close, according to people in the know. Physis Capital raised Rs 200 crore and AJVC secured Rs 100 crore, while Artha Venture Fund announced the first close of its second vehicle at Rs 250 crore. Other funds launched this year included Zeropearl VC, 888 VC and BYT Capital.
Established micro-VC firms include Vaibhav Domkundwar’s Better Capital, deeptech-focused Java Capital, Delhi-based Sauce VC that makes consumer-sector investments, and the $25 million, enterprise software-focused, Neon Fund.
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The trend will only grow as more micro VCs open access to early capital and reshape how entrepreneurial risk is taken in India, IVCA president Rajat Tandon said. “India’s micro-VC landscape has expanded rapidly, growing from just over 60 active funds in 2021 to nearly 250 today. Micro VCs are backing founders earlier, taking sharper thematic bets and accelerating innovation, research and deeptech development,” he said.
Investors said the rise in micro-VC firms is also a sign of ecosystem maturity.
Accel’s founding partner Prashanth Prakash said the sharp rise in micro-funds signals a deep pipeline of early ideas. “Many first-time founders get a real shot, and more ideas get validated early,” he told ET, adding that the trend widens the innovation funnel and creates a healthier pipeline for later-stage investors.
Small funds, better returns
Seed-stage funds claim that smaller portfolios enable stronger engagement and faster liquidity. 247VC said it will offer Rs 3-4 crore cheques and back 30 companies over its nine-year fund life. This will include graded exits every one to two years to ensure steady cash returns to LPs.
“Even if five out of 30 perform well, the fund can generate strong returns. For us, Rs 250 crore was intentional; we could have raised Rs 500 crore, but that would dilute attention and reduce portfolio support,” said managing partner Yagnesh Sanghrajka.
Part of the Artha Group, Artha Venture Fund’s Anirudh Damani, who is looking to invest in 36 seed-stage startups, said it’s not that funds are investing less; rather, the fund size has become smaller, which means bets are more concentrated. “With smaller funds, you don’t need outlandish returns to make the math work. Family offices today prefer these small fund models because they are also constrained by the amount of capital they can deploy.”
When a Rs 5,000 crore fund is trying to raise from institutions, those LPs are looking for a 12% or 15% internal rate of return, he said. This means large funds structurally have to take bigger bets and larger cheques and deliver higher institutional return targets.
According to IVCA data, domestic investors’ share of capital in Category I and II alternative investment funds (AIFs) has risen from 50.3% (March 2024) to 52.7% (June 2025), with Rs 72,667 crore of domestic LP capital flowing into these funds.
Deeptech-focused funds are also benefiting from a shift towards specialised micro-VC models.
BYT Capital, which last week announced a Rs 180 crore deeptech fund, said as lab-to-prototype cycles get faster and the ecosystem matures, the opportunity is growing. “India is at a turning point in its deeptech story, and this moment demands specialised investors who understand science, timelines and technical risk,” said founder Amit Chand.
India now has more than 1,600 AIFs, with nearly 1,000 registered in the last four-and-a-half years, seeing a 61% increase in participation from family offices, wealthy individuals and domestic institutions, according to IVCA data.
