India’s VC Crossroads, UPI Race, and Licious Shuts UnCrave

For years, India’s venture capital ecosystem was fueled by foreign capital. The “unicorn rush” of the 2010s was led by Tiger Global, SoftBank, and other crossover funds, who sprayed money into consumer internet plays like Flipkart, Ola, and Paytm, pushing founders into blitzscaling. That party ended with the funding winter of 2022–23, when India’s VC inflows collapsed to $9.6 billion - down nearly 40% from the highs of 2021. But the rebound since then is telling: in 2024, VC funding recovered to $13.7 billion, not because global giants came back, but because domestic capital stepped up.

The story lies in the composition. Deal volumes surged 45% in 2024 to 1,270, with 95% of them under $50 million. Mega-deals fell in size, and only five unicorns were minted in H1 2025. This isn’t froth; it’s discipline. New Indian funds - 3one4 Capital backing Licious and Yulu, Fireside Ventures supporting boAt and Mamaearth, Sorin Investments in fintech like KreditBee - along with nearly 300 active family offices, are powering a more measured, rupee-denominated cycle.

Domestic capital brings clear advantages. It is patient and less exposed to U.S. interest rate cycles that make foreign capital fickle. It is aligned with national priorities like defense, semiconductors, and clean energy. Take Agnikul Cosmos and Skyroot Aerospace, which have raised from Indian funds and ISRO-linked incubators, or renewable energy startups like ReNew Power that benefitted from both government incentives and local capital pools. Government platforms, from the Fund of Funds for Startups (₹20,000 crore corpus) to Digital Public Goods like UPI and ONDC, are de-risking frontier sectors and creating predictable markets. Unlike the West’s purely private-sector playbook or China’s state-driven model, India is carving a hybrid path: private initiative resting on state-built rails.

But the weaknesses are just as stark. Domestic late-stage capital is still missing. Growth-stage rounds above $100 million remain dependent on foreign LPs, leaving capital-intensive startups vulnerable to global cycles. Zepto’s $665 million raise in mid-2024 came largely from StepStone, Glade Brook, and Nexus’s offshore LPs. Lenskart’s mega-rounds are still Tiger-led. Even PharmEasy, once a darling of domestic retail investors, had to scramble for debt when global capital dried up. Sanjay Nayar of Sorin Investments calls this “India’s biggest gap” - a lack of deep domestic LPs like pension and insurance funds.

This dual-engine model — domestic bedrock, foreign booster — is India’s reality. Domestic VCs and family offices are seeding profitable, niche businesses like Neemans, Sugar Cosmetics, and Healofy, while foreign funds still play the role of scaling giants like Flipkart, Zepto, and Meesho globally.

Globally, the comparison is stark. The U.S. continues to rely on massive private LP pools; China leans on state-owned giants. India’s blend of family offices, government-backed AIFs, and nimble domestic VCs is closer to a “middle path.” If it works, it could become a template for emerging markets balancing openness with self-reliance.

The culture war is also reshaping incentives. Foreign-first blitzscalers often overlooked governance, leading to scandals in unicorns like BharatPe and Byju’s. Domestic VCs, sitting closer to the action, are enforcing stricter discipline and embedding ESG principles. For instance, Fireside pushed Mamaearth to prove profitability pre-IPO; A91 Partners guided Sugar Cosmetics into EBITDA-positive territory before fresh rounds. The presence of an Indian fund on the cap table is now a badge of stability.

The road ahead depends on whether India can deepen its LP base. Pension funds, insurance companies, and even retail investors must be enabled to allocate into venture capital. Without this, domestic muscle will plateau, and foreign dependence will persist at the late stage. But if India succeeds, the next decade could see IPO-ready startups like Physicswallah, boAt, and Urban Company funded and exited largely within India, with wealth creation staying onshore.

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.

“Ghodo Ke Race Mein Gadhe Bhi Daudenge”: BHIM Surpasses Amazon Pay, PhonePe Continues To Lead

Looks like BHIM just edged past Amazon Pay in the UPI race, clocking 10 crore transactions worth nearly ₹15,000 crore in August.

But the big league still belongs to PhonePe and Google Pay, handling a staggering 915 crore and 706 crore payments respectively. With UPI hitting a fresh record of 20 billion transactions, digital payments in India are clearly in no mood to slow down.

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“Sunday Ho Ya Monday, Roz Khao Ande”: Licious Shuts Plant-Based Meat Platform UnCrave To Focus On Profitability

Licious has quietly pulled the plug on its plant-based meat brand UnCrave, after realising the market wasn’t meaty enough to justify the spend.

The move comes as the D2C giant doubles down on profitability with its eyes set on a 2026 IPO. Looks like for now, it’s back to focusing on real meat to cook up investor confidence.

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“Ho Raha Bharat Nirman”: Centre Mulls $20 Bn Incentives For Semiconductor Mission 2.0

The Centre is cooking up a $20 Bn booster shot for India’s chip dreams under Semiconductor Mission 2.0.

From India’s first display fab to a spruced-up ₹5,000 Cr design incentive pool, the plan is all about making the country silicon-strong. If approved, this could be India’s biggest push yet to cut its chip import bill and power the tech future.

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1. In an extended Series F round, logistics startup Porter is set to raise an additional $100 Mn, taking the total to about $310 Mn. The fundraise, at a steady $1.1-1.2 Bn valuation, includes $250 Mn in secondary deals and $50 Mn in fresh capital.
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2. Indigrid has secured $4 Mn to ramp up its EV component production, boost automation, and expand its footprint. The startup, which posted ₹108.5 Cr revenue in FY25, is eyeing a sharp jump to ₹350-380 Cr in FY26.
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