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In It For The Long Haul: How Indian VCs Are Making A Case For Patient Capital
- Indian VCs are adopting patient capital approach, investing in early-stage growth companies for the long term, unlike the fast-paced market norm.
- Around 2010-2011, early VCs in India focused on quick returns rather than patient capital, driven by overseas LPs and a playbook of rapid scaling and exits in 3-5 years.
- Exceptions like Blume Ventures and a few Indian family offices embraced patient capital early on; funds relied heavily on foreign investors initially.
- Patient capital in India began with philanthropic funding, evolved into a structured category, especially in sectors like cleantech & deeptech.
- The shift towards patient capital has led to more domestic LPs investing in early-stage startups, although foreign LPs still dominate funding.
- The concept of patient capital faces challenges in a VC ecosystem built for quick returns and requires a strategic shift towards longer investment horizons.
- Patient capital is crucial for sectors like agritech and electric mobility but clashes with short-term return expectations from LPs.
- Investors highlight the importance of aligning founder and LP expectations, managing illiquidity concerns, and structuring funds for progressive liquidity to make patient capital work.
- Increasing domestic LP participation in long-term bets requires policy support, alignment with startup objectives, and a shift towards viewing venture capital as a structured asset class.
- Despite challenges, there is a gradual shift towards patient capital in India, emphasizing the need for a deeper domestic pool of patient capital for sustainable growth.
- The evolving landscape of Indian VCs signals a move towards patient capital, driven by a growing focus on long-term investments and the imperative for domestic LPs to support innovation and growth.
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