IvyCap's Decade Of Startups: How The VC Fund's Thesis Has Evolved
Fifteen years ago, IvyCap founder Vikram Gupta and his team set up a venture capital firm in Mumbai, but the pitch he had in mind or the funding landscape before him was anything but simple. The startup ecosystem was nascent and primarily supported by angel investors.
Only a handful of private equity/venture capital players were active in that space. Not too many big cheques were written then; exits were rare, and young ventures needed guidance and connections from investors and mentors to script their success stories.
A chemical engineer from IIT-Delhi and an MBA in strategy and finance from Case Western Reserve University, Ohio, Gupta’s foray into venture capital was catalysed by the 2008 financial crisis when he raised INR 400 Cr for a private equity fund under the Piramal Group. His success not only honed his deep understanding of private capital but also underscored the untapped potential of domestic capital. Until then, most Indian VCs relied on overseas capital.
But when Gupta launched IvyCap Ventures in 2011, it was built on the premise that the country’s institutional investors, family offices and high-net-worth individuals should play a leading role in shaping India’s burgeoning startup ecosystem.
As the founder and managing partner of IvyCap, Gupta has ushered in endowment-style investments to fund and foster startup innovations. Simply put, the VC firm has blended the alumni networks of India’s premier institutions (read IITs and IIMs) with venture capital’s traditional model to build sustainable endowment ecosystems.
This helps startup founders access funding and mentoring while the country’s Ivy League gets long-term financial support through their investment incomes. Additionally, it invests heavily in a few high-potential businesses to ensure high-value returns.
Helmed by the industry veteran with 30 years of experience in PE/VC, M&A, strategy and operations, the VC firm has already closed three funds, bringing its total assets under management to more than INR 5000 Cr.
The VC firm’s portfolio includes 50+ startups across healthtech, fintech, consumer brands, electric mobility and the deeptech sector. It is now working on a fourth fund to bolster the country’s startup ecosystem further.
IvyCap launched its first fund in 2014 with a corpus of INR 240 Cr and backed 10 companies, including notable names like and BlueStone. Fund II came in 2017 with a larger pool of INR 530 Cr and supported 15 startups, such as Clovia, Sokrati, Pharmarack and Aujas, between 2018 and 2021.
It , with a focus on early-stage investments. The VC aims to invest in 25+ startups, with initial funding of INR 30-50 Cr per company. Interestingly, most of the capital for Fund III came from domestic LPs (limited partners) and around 60% was contributed by those who invested in IvyCap’s first two funds. Nearly 40% of this corpus has been invested in a host of ventures such as Dhruva Space, Snitch, Celcius Logistics, GradRight and Eggoz among others underscoring IvyCap’s commitment to diversified funding across sectors.
As part of our Moneyball series, Inc42 had a deep conversation with Gupta, as he discussed IvyCap’s investment thesis, the evolution of India’s startup ecosystem, the investment trends of 2025 and what it would take to build an enduring business in a challenging market.
Here are the edited excerpts.
Inc42: Tell us more about the story behind IvyCap. How is it different from other VC players?
Vikram Gupta: IvyCap Ventures started with a simple idea, but I was deeply passionate about it. When we launched our first fund worth INR 200 Cr, the core concept was to invest in startups by tapping into the unique strength of an alumni-driven ecosystem. So, I created a database of 75K IIT alums, believing that this ecosystem could provide everything we needed – investors, mentors and founders.
We had three core objectives when we reached out to them [the IITians]. These included:
- Establishing a structured investment process
- Identifying and investing in promising startups
- Building a sustainable model through endowments and reinvesting a significant portion of profits into IITs
Although it was well-known in the US, the endowment model was a novelty here when we introduced it in 2011. The concept resonated deeply with the IIT alum network, played a crucial role in our early success and helped me assemble a talented team in no time. My cofounder Ashish Wadhwani, a former classmate from IIT-Delhi, also joined us from that network as he shared our vision.
This unique approach helped us raise INR 240 Cr for IvyCap Fund I, with INR 50 Cr coming from the IIT Alumni Trust. The rest came from institutional investors, including banks and insurance companies. Many were new to venture capital, marking a significant milestone in our journey.
Inc42: What challenges did you face when raising the first fund in 2014?
Vikram Gupta: The biggest challenge we faced was convincing institutional investors who had never seen successful exits. So, they were hesitant. I knew from my fundraising experience that investors were drawn to the concept. But they were not sure if their capital would yield returns.
At the time, many VC firms adopted a spray-and-pray strategy, betting on a large number of startups and hoping that a few big exits would offset their losses. But we chose a different path. Our plan was to invest heavily during Series A or B, taking substantial stakes and aiming for controlled exits within five years.
For example, we invested INR 15 Cr in Purplle, a digital-first beauty and personal care platform, and secured a 50% stake. We also acquired a 30% stake in another portfolio company. The idea was to make concentrated bets on a few high-potential ventures to maximise returns instead of spreading our investments too thin.
This strategy paid off. Among the 10 investments made from IvyCap’s Fund I, we had two dragons – investments that saw exceptionally high returns. Purplle was India’s first-ever dragon startup, and another startup also surpassed its initial value. These successful exits validated our investment thesis, attracting more institutional investors to the VC ecosystem. (Fund I realised an INR 330 Cr exit, with a 22x return on Purplle, according to a company statement.)
As a result, when we launched our second fund, we set a target of INR 500 Cr but closed at INR 530 Cr, with most of our Fund I investors reinvesting. This allowed us to expand our portfolio to 23 startups, all while sticking to our disciplined investment approach.
Inc42: Did your investment thesis change over time?
Vikram Gupta: Our core strategy has remained consistent, but there has been a significant shift since Fund III. We have introduced seed stage investments as many promising ventures are emerging early, and we want to back them from the outset. A portion of Fund III (reportedly INR 100 Cr, although Gupta did not confirm it) has been earmarked to support high-potential startups before they reach Series A.
Beyond that, our fundamental approach has not changed. We will prioritise high-growth, deep-tech and disruptive businesses while sticking to our disciplined funding and exit strategies.
As we work on Fund IV, we aim to scale our impact by leveraging our alumni-driven model and expanding into new but high-growth sectors like defence tech, spacetech and semiconductors.
Inc42: How has the Indian startup ecosystem evolved since IvyCap’s inception in 2011?
Vikram Gupta: The Indian startup ecosystem has undergone many changes. In 2011 or thereabouts, raising funds was a significant challenge. Institutional investors were largely sceptical about funding startups, and if a VC had an early-stage approach, it was not taken seriously.
The Department of Science and Technology was one of the first entities to promote startup technologies, laying the groundwork for structured funding. Over time, clear policies, better tax reforms and well-defined fund structures helped shape the ecosystem. The involvement of family offices and capital reinvestments by successful entrepreneurs further strengthened the startup landscape.
The ecosystem has now matured considerably. There were only a handful of registered funds when I started, but today, the number has grown exponentially [per Tracxn data, as of January 2025]. However, like any evolving market, there have been periods of flux. Or think of external challenges like the Covid-19 pandemic that redefined the investment dynamics. As global capital slowed, funds increasingly flowed into Indian startups during that period.
The landscape shifted again in 2022 due to rising interest rates and global economic and geopolitical uncertainties. Since 2024, investments have depended heavily on policy developments in key markets like India, China, and the US. Investors are more cautious now, waiting for clear signals before committing large amounts.
Inc42: What steps should be taken to build greater investor trust and ensure more diversified funding?
Vikram Gupta: VC players typically raise capital from domestic and international investors like banks, insurance companies, family offices, university endowments and pension funds. These are big institutional investors with large pools of money. But stringent policy frameworks have long posed challenges to this traditional model. Although some of these investors have seen positive returns, others are still testing the waters.
One positive trend is that family offices are getting more involved and writing large cheques. The sharp rise in the number of registered startups [ as of December 2024] also signals a strong demand for funding dollars, but the supply of capital is still limited. We see only a fraction of the investment needed – just a few billion dollars annually – far below the market’s potential.
To bridge this gap, we have developed initiatives like IvyCamp, a collaborative hub for startups, investors and IIT alums, where we provide mentoring, strategic guidance and funding support. We also plan to raise INR 200 Cr in endowments for early-stage research, innovation and global collaborations.
At IvyCap, we take significant minority stakes at the Series A stage, ensuring we have enough control over exits. Our goal is not just sound financial returns but fostering a sustainable ecosystem so that Indian startups can compete globally.
Inc42: With the launch of its third fund, IvyCap made seed investments across sectors. What are the focus areas in 2025?
Vikram Gupta: If you look at the bigger picture, you will see that our focus areas sync with where India is headed. There has been a concerted effort to drive the country’s economy, and this year’s [FY25-26] Union Budget is another push towards that direction. We will see significant investments in critical sectors such as infrastructure, energy and cleantech, and each will unlock new investment opportunities.
As the supply chain is pivotal in harnessing this growth, we have already invested in logistics and see more opportunities emerging in rural India. Plus, there could be incentives for businesses involved in skill development and rural infrastructure, creating further investment potential.
In the next six to seven years, we expect certain sectors to become extremely attractive from a risk-reward perspective. Emerging tech and deeptech sectors, including the IoT, digital sciences, defence tech, spacetech and semiconductor manufacturing, will be key areas for capital allocation.
Currently, India lags in semiconductor manufacturing, with most production happening in Southeast Asia. However, there is a strong need to catch up and bridge this gap. We think more initiatives under ‘Make in India’ will boost the country’s manufacturing capabilities. Any sector where India can effectively compete with China and other global players will present substantial opportunities.
In sum, we are very bullish on India. Given the right founders, disruptive business models and the potential for scalability, we can make a significant impact over the next eight to 10 years by investing in this evolving ecosystem.
Inc42: How do you assess the rise of artificial intelligence? What about the growth of AI startups in India?
Vikram Gupta: In the next six to seven years, we expect certain sectors to become extremely attractive from a risk-reward perspective. Emerging tech and deeptech sectors, including the IoT, digital sciences, defence tech, spacetech and semiconductor manufacturing, will be key areas for capital allocation.
Founders are increasingly applying AI to niche, specialised use cases, and this trend shows no signs of slowing down. In fact, we will see more granular, micro-aligned and sector-specific applications as artificial intelligence evolves. This is bound to unlock a new wave of exciting business opportunities.
That’s why we are closely watching fast-emerging AI technologies and trends, especially those used for highly specific business applications. These innovations can transform industries in ways we are just beginning to grasp.
Inc42: Where do you see most investments happening in the AI startup ecosystem? Which stages and sectors will see maximum interest?
Vikram Gupta: Well, investments will continue to flow, especially at the seed stage. The startup ecosystem in India has evolved a lot in recent years, and a growing number of angel groups are now actively backing early stage ventures. But at this stage, investors are betting more on people – the founders and their teams – than concepts and insights. I am saying this because AI has become such a popular buzzword that its mere mention may help you secure funding without any hassle. However, the failure rate of startups in this space will be significantly high if this trend continues.
On the other hand, founders building scalable businesses and demonstrating real revenue growth will attract funding, as AI models will continue to disrupt industries. Take a look at the AI applications in fintech. These smart tools have transformed debt collection by automating every function. Instead of relying on call centre staff to follow up with EMIs, AI-powered systems now directly engage with customers, send reminders, offer payment solutions and even negotiate terms to resolve non-payment issues.
In healthcare, AI is already helping doctors with initial assessments. In the education sector, it supports teachers by personalising learning and improving teaching practices through data-driven insights. Yes, education has been hit hard by BYJU’S debacle, and investment has dried up in the past two years. Still, there are many challenges within this sector, and AI has the potential to address them.
Beyond these sectors, AI is expanding into infrastructure, IoT and drones. For example, companies like Yellow Style help builders remotely track their projects. These AI-driven technologies are not just capturing images. They are generating reports, analysing those and automating processes, which would have otherwise taken months. The impact of AI is just beginning, and we will witness more transformation across industries.
Inc42: What’s your advice for Indian startup founders in 2025?
Vikram Gupta: One of the most critical lessons founders still need to learn is mastering cash flow management. We have learnt it the hard way and now work closely with IvyCap portfolio companies to ensure cash flow planning remains a top priority.
I will tell you why it matters so much. Many sectors, especially highly regulated ones like fintech, can suddenly face operational hurdles. A single policy change can throw an entire business model off the track. If startups fail to manage cash flow effectively in those situations, they may risk a collapse overnight. Regulations evolve constantly, and authorities take a tough stance even after a single negative incident. It often affects an entire sector, not just the company involved.
Think of BYJU’S. The fallout there could have happened almost anywhere. To counter those issues, people must stay ethical and not cut corners. If you think long-term, focus on the business and its core values.
Yet, many founders get distracted by short-term challenges and lose sight of their original vision. It often happens because they don’t have the right advisors to help them at critical junctures.
One must have access to good mentors and learn to stay focussed to build a value-added business. Startup founders are learning this but still have a long way to go.
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