Good Morning [%first_name |Dear Reader%],

Just about a week ago, company financials tracker Venture Intelligence released venture capital (VC) and private equity (PE) funding data for the first nine months of 2025. Late-stage startups bagged most of the pie, seeing 35% of the total deal value flowing into their war chests. 

Now, that’s not surprising at all. Large, mature companies have usually grabbed the largest share of VC-PE funding during most years, primarily due to the fact that deals at that stage are generally big-ticket. 

Overall VC-PE investment in India’s startups, though, has continued to trend quite a bit lower than the peaks it hit immediately after the Covid outbreak. The zero-interest rate policies (ZIRP) adopted by a few major central banks during and after the pandemic left the markets flush with funds for a couple of years, but that has been changing.

And the ones feeling this impact most acutely are early- and seed-stage startups. 

Just look at how deal values and volumes have trended for different startup stages over the past few years.

“Safe bets” and close-to-IPO ventures are the flavour of the season. 

To quote Arun Natarajan, founder of Venture Intelligence, from a Times of India piece about the data release: “Given the continued uncertainty on the global politico-economic front, investors can be expected to prefer late-stage minority investments, with a special focus on domestic market-oriented companies in the upcoming months as well.” In the same piece, Navin Honagudi, managing partner at Elev8 Venture Partners, says what we are witnessing right now is a “flight to quality, where capital is chasing fewer but stronger companies”. 

The improved prospects for exits through IPOs is no doubt also fuelling the trend. 

Given all this, I thought we’d use this week’s edition of The Collection to look at the evolution of VC funding and behaviour in India in the post-Covid, post-ZIRP era—from how the nature of VC-founder relationships have changed to shifts in term sheets and governance requirements. 

It’s certainly cautious funding weather right now, and previously hot sectors such as quick commerce, fintech, and edtech have lost much of their sheen. If you can’t bet on sectors, though, you can definitely bet on founders. 

Which is exactly what many VCs are doing now, looking for proven founders—with a solid record of delivering in the past—to invest in. Even if they have a chequered history.

Another shift in the post-ZIRP era has been what VCs expect from term sheets and governance standards. 

We explored these changes in detail in the story below. 

VCs have also become more familiar with the idiosyncrasies of India’s funding environment, and with liquidity tightening, they’ve been forced to grow a bit of patience. 

The Two by Two episode below features two founders-turned-VCs—Manav Garg, founder of Eka Software, co-founder of Together Fund, and Rajiv Srivatsa, co-founder of Urban Ladder, and founding partner at Antler India to explore what is and should be changing in venture-capital investing.

There are, of course, some shifts VCs no doubt think they can do without. For instance, in 2022, India’s largest limited partner for venture capital, state-run Sidbi, suggested reducing management fees for VC funds larger than Rs 500 crore to 1.5% from 2%. 

In this story below, we explored the 2/20 rule that many VCs follow, whether the cut could backfire for Sidbi, and what is Sidbi’s larger role in India’s VC ecosystem.

Meanwhile, it isn’t just business that the flow of venture capital can impact—there are societal implications too. 

If this flow is directed at the right places and sectors, though, it can drive real positive change. We’ve written earlier about the shortage of funding for R&D in India, partly thanks to private investors’ lack of enthusiasm for it. But now, deeptech ventures make up over half of the portfolios of some generalist VC firms, according to Business Standard.

What’s it like investing in a sector where payoffs need far longer to gestate than most other segments? Ask the VC who invests solely in deeptech startups.

That’s a wrap for today. I’ll see you next week with another interesting theme, but meanwhile, feel free to write to [email protected] if you have any thoughts, suggestions, or feedback.