Domestic Capital Rising, Urban Company’s InstaHelp, and PhonePe x Microsoft Foundry

For over a decade, Indian founders built companies with one eye on Bengaluru and the other on Sand Hill Road. When US rates were low, capital flowed freely. When the Fed tightened, term sheets vanished. The 66% funding collapse in 2023 - down to $6.9 billion, with Tiger Global, SoftBank, and others cutting India exposure by over 85% - was a brutal reminder of that dependency .

Now, the architecture is changing.

Peak XV has raised $1.3 billion in its first post-Sequoia fund. General Catalyst has committed $5 billion to India over five years. The Union Cabinet has approved Startup India Fund of Funds 2.0 with a ₹10,000 crore corpus. Meanwhile, India’s AIF ecosystem has crossed ₹15.05 lakh crore in cumulative commitments, with domestic capital accounting for roughly 55% of Category I and II AIF commitments.

This is not a cyclical rebound. It is the beginning of what can only be called the AIF Era.

Domestic capital is no longer an alternative, it is becoming the core. High-net-worth and family office money is flowing into AIFs at scale. Motilal Oswal’s ₹8,500 crore fund closed at hard cap in under 10 months, targeting $40-$100 million cheques in IPO-visible businesses. JM Financial has launched a ₹1,500 crore pre-IPO vehicle. Secondary transactions within AIFs now exceed ₹377 billion annually, creating structured liquidity beyond IPOs .

The behavioural shift is already visible. Nearly half of investors now prioritise profitability and reduced cash burn when backing IPO-bound startups . The “growth-at-all-costs” era is giving way to “path-to-listing” discipline. Fund lifecycles of 5-7 years demand visibility on exits. Public markets demand predictable cash flows. Domestic AIFs reinforce both.

The IPO pipeline reflects this new mood. Nineteen startups have already filed DRHPs; 25 more are preparing. Unicorns like PhonePe, Zepto, OYO, Infra.Market, Flipkart, and Zetwerk could collectively raise tens of thousands of crores. In 2025 alone, 18 startups listed, raising ₹41,248 crore, and India led the global IPO market with 254 listings . The average time to IPO has compressed to 13.3 years.

The message is clear: founders are building for NSE and BSE, not for Silicon Valley M&A.

There are structural advantages. Domestic capital is less sensitive to US rate cycles. In 2025, while foreign institutional investors withdrew heavily, domestic institutions deployed over ₹6 lakh crore, overtaking FIIs in total equity holdings . Local fund managers understand India-specific unit economics - why COD still matters, why Tier-2 demand curves differ, why hyperlocal density drives viability.

But risks are real.

With over ₹15,000 crore of fresh domestic dry powder chasing IPO-ready assets, valuation discipline could erode. An over-reliance on domestic capital may narrow global exposure. International VCs brought more than money - they brought cross-border networks, global hiring pipelines, and pattern recognition from multiple markets.

The ecosystem buzz suggests founders are negotiating harder with global VCs, leveraging domestic “Plan B” options. Trust shifted in 2023, when foreign capital froze. Domestic capital held steadier. That memory lingers.

The AIF Era does not mean the end of global capital. It means balance. India is moving from a USD-denominated, sentiment-driven model to a domestically anchored, listing-first ecosystem.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Waah Kya Scene Hai”: Urban Company’s InstaHelp hits 50,000 daily bookings

Urban Company’s InstaHelp has quietly crossed 50,000 daily bookings within a year of its March 2025 pilot, signaling that quick-service housekeeping is scaling faster than many expected under CEO Abhiraj Singh Bhal.

At this pace, monthly volumes could soon top 1.5 million, putting it within striking distance of the 1.61 million quarterly orders Urban Company logged in Q3 FY26.

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“Ash Toh Kar Yaara Ash Toh Kar”: PhonePe launches AI-powered search built using Microsoft Foundry

PhonePe has rolled out an AI-powered natural language search built on Microsoft’s Foundry, bringing conversational commands into its app ecosystem.

The feature, launching in phases across India, lets users initiate and complete tasks using simple text or voice prompts. It is another sign that fintech apps are quietly morphing into AI assistants, not just payment gateways.

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1. Mojro has secured $3 Mn led by IAN Group’s IAN Alpha Fund with backing from 1Crowd to scale its AI-led logistics platform. The funds will drive US and Southeast Asia expansion while strengthening product and teams.

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2. MyDesignation has raised ₹40 Cr in a Series A round led by RPSG Capital Ventures and Veltis Capital. The D2C streetwear brand will use the funds to expand offline in Chennai and Hyderabad while strengthening its Bengaluru presence.

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3. Pluckk is set to raise ₹100 Cr from existing backer Euro Gulf Investment, marking a follow-on bet after last year’s $10 Mn infusion. The fresh round signals continued investor confidence, though the company has yet to officially announce the deal.

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4. The ePlane Company is eyeing $40-50 Mn in a Series C round, with Speciale Invest set to co-lead the mix of equity and convertible instruments. The Chennai-based electric aircraft startup has raised $20 Mn so far and is now preparing for a larger takeoff.

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5. Hycosys has raised $1 Mn in a seed round led by MountTech Growth Fund–Kavachh to build hydrogen-compatible micro gas turbines. The capital will back team expansion, advanced testing, and a working clean-energy alternative to diesel generators by 2027.

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6. IAN Alpha Fund has led a $3 Mn round in Mojro, with participation from 1Crowd and existing backers. The capital will fuel US and Southeast Asia expansion while strengthening its AI-driven logistics platform and global teams.

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7. Coulomb Litech has raised ₹20 Cr in seed funding from HNIs to scale manufacturing and deepen its footprint in India’s EV ecosystem. Founded in 2020 by IIT Kanpur alumni, the Mumbai-based startup builds fast-charging, long-life battery systems for medium and heavy electric vehicles.

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