In It For The Long Haul: How Indian VCs Are Making A Case For Patient Capital

A couple of years ago, the leading Indian stockbroker, Zerodha, made a surprising announcement. Its investment arm, Rainmatter Capital, would deploy an additional INR 1K Cr in ‘patient capital’ to support Indian startups. What set this move apart wasn’t the scale but the investment thesis. Cofounder Nithin Kamath took to X (formerly Twitter) to post a refreshing approach to startup investing.

“Good businesses cannot be built overnight, something we learned in our journey. So we are perennial investors and stick with the founders for as long as it takes the founders to build a sustainable business,” he tweeted.

Zerodha is not alone. A handful of venture capital (VC) players, including Blume Ventures, Aavishkaar Capital, Bertelsmann India, Artha India, 3one4 Capital and others, have opted for patient capital, backing early stage growth companies for the long term, even in a fast-paced market.

The concept is not new. Venture capital has long proclaimed itself as a provider of patient capital, a label popularised in Silicon Valley and echoed across global startup ecosystems. However, in India, that ‘patience’ has been more a myth than a method, especially in the early years of VC play.

Around 2010–2011, the country’s venture capital ecosystem was still taking shape. Most funds were supported by overseas limited partners (LPs), including development finance institutions (DFIs), global family offices and international fund-of-funds. They considered India a high-growth market with the promise of outsized returns.

Despite the patient capital rhetoric, early VCs in India moved fast and expected faster returns. Their playbook had no ambiguity. It was all about investing early, helping portfolio companies scale rapidly and exiting in three to five years.

LPs also understood this math — a few big wins, several failures and many write-offs in between. It wasn’t about India-specific projections or long-horizon thinking. It was portfolio theory in action, fuelled by global capital, global networks and a tolerance for high failure rates in exchange for a few mind-boggling returns.

There were a few exceptions, though. Blume Ventures, for instance, launched its first fund in 2011 with purely domestic capital. A couple of Indian family offices, led by Azim Premji and Ratan Tata, dabbled in venture bets, but those were standalone initiatives.

For most fund managers, reaching a first close meant courting foreign DFIs like the International Finance Corporation, the CDC Group and the Asian Development Bank or tapping into high-net-worth individuals (HNWIs) abroad to gain initial traction and credibility.

India’s institutional capital was painfully absent at the time. Banks, insurers and pension funds steered clear of the VC ecosystem, citing regulatory friction and a deep-rooted aversion to early-stage risks.

In this edition of Inc42’s ongoing Moneyball series, we will dive deep into how patient capital gradually evolved in India to make the cut as a structured investment category and its critical importance for complex sectors with long innovation or impact cycles and high levels of uncertainty.

From Impact At Scale To Venture-Grade Returns: Patient Capital Made The Cut

Until 2015, patient capital in India was synonymous with philanthropic or concessionary funding. Early movers like Aavishkaar Capital embraced this model, backing impact-driven ventures such as Ergos, a grain storage platform for smallholder farmers, and Vaatsalya (now exited), one of the country’s first rural hospital networks. These were long-term bets, often held for seven to 10 years or more, in which investors accepted delayed liquidity in exchange for scalable social impact.

Omidyar Network India which exited the market in 2024, followed a similar playbook, supporting 1Bridge (rural commerce), Doubtnut (vernacular edtech) and Agami (legaltech for underserved communities).

But after a year, that scenario began to change. As capital-intensive sectors like cleantech, climate tech, deeptech and biotech gained traction, patient capital started to look less like impact funding and more like a strategy.

GrowX Ventures, for example, invested in the spacetech startup Pixxel at the pre-seed stage in 2019 and secured a 17x partial exit by May 2025, a 68% internal rate of return in 5.5 years. This kind of performance reframed long-horizon investing as a viable path to venture-scale returns.

These success stories were nudging more domestic LPs, including family offices, quasi-institutional players and government-backed funds, into early stage investing. Although domestic capital still accounts for less than 10% of total startup funding, having a 100% domestic LP pool has become a differentiator for players like TVS Capital Funds, AdvantEdge Founders and Sharrp Ventures.

Will The Fringe Model In A New Avatar Trigger A Structural Shift?

Despite the buzz around patient capital, traditional venture funding is not in sync with that approach. Even now, most VC funds are built for speed, driven by short fund cycles and LPs seeking returns that rival those of public and private equity markets or real estate assets.

“As returns from public equities and other alternative assets improve, many offering better risk-adjusted outcomes or faster liquidity, the performance bar for venture capital has also gone up,” said Sandiip Bhammer, founder and managing partner of Green Frontier Capital, a climate-tech-focused VC firm. “Only high-conviction bets like deeptech and climate tech have the potential to match or beat what those markets offer.”

The repositioning of patient capital as a strategy and a competitive investment category is prompting a broader industry rethink. But it also exposes an uncomfortable truth. Long-term capital has never been a standard practice in mainstream venture funding. It has always occupied the fringes, making its current resurgence all the more compelling.

Vishesh Rajaram, founder and managing partner at Speciale Invest, an early stage deeptech venture capital firm, offered a blunt diagnosis. “Investors have been behaving like fund managers, not venture capitalists. Hence, these issues.”

At the core of these developments is a fundamental departure from the original ethos of venture capital, particularly as it has evolved in the West, where investors are expected to embrace genuine risk and provide extended timelines. In India, Rajaram argues, that ethos has eroded. Capital has predominantly chased low-gestation sectors like fintech, consumer brands and SaaS, which offer quick exits.

“Outside those verticals, the system is ill-equipped for true patience and long-term bets,” he said. “We have become too used to avoiding that. We have forgotten what patient capital is supposed to handle.”

In his view, the current ecosystem’s fixation on speed — quick growth and quicker returns — has made long-horizon investing seem like an outlier. “As long as you don’t make people wait, everything is fine,” he said. “But that’s not how long-term value is created.”

But why is this reckoning happening now?

As everyone is currently discussing patient capital, it now faces a credibility test. Until fund structures, return expectations and LP mandates change in tandem, it may sound more like a buzzword than a structural shift.

Long-Term Investment Goes Beyond The ‘Long’ Game 

Initially, patient capital appears to be about duration — funding that is willing to wait 10-15 years for returns rather than the typical five to seven years of VC tenure. But seasoned investors argue that the concept runs deeper. It is less about timelines and more about disposition: How the capital behaves during the wait.

“Patient capital matters most when you are backing innovation,” said Anup Jain, founding partner of the climate-focussed early stage VC firm BlueGreen Ventures. “Developing and validating intellectual property takes time.”

Manish Singhal, founding partner at pi Ventures and specialising in deeptech, concurred. “It is not just about time horizons. It is about the investor mindset. Investments don’t move linearly. The real test lies in staying with a company through thick and thin.”

Bhammer of Green Frontier also echoed this sentiment. Patient capital is less about holding power for a considerable time and more about resilience, the ability to stay engaged amid uncertainties and slow returns. In his experience, such investors tend to back high-stake sectors where progress is slow, and breakthroughs take time. He calls it “high-friction capital”, money that neither rushes to grab opportunities nor retreats at the first sign of turbulence.

At Inc42, we have distilled these views to arrive at a brief breakdown of what defines patient capital across key parameters — investment timeframe, risk tolerance, active engagement and sectoral fits.

Debunking The Myths Of Locked-In Funds, LPs As Patient Investors

Industry insiders profess that investors’ risk appetite in India remains low compared to global ecosystems. At home, funding typically flows to startups with clear proof of concept and commercial viability, often in well-established sectors.

A shift in investor mindset is helpful, but it requires debunking the enduring myths surrounding patient capital. One such myth is that it requires locking up money for 15 years with zero liquidity. In practice, most venture capital funds, even those backing long-gestation bets, are not structured in this manner.

As Singhal put it, “Liquidity happens along the way. Your last rupee may come out after 15 years, but much of the returns will come within five to 10.”

Even the so-called patient capital in India typically follows the standard 8+2 fund structure, with extensions rarely going beyond that, according to Jain. Most limited partners, particularly high-net-worth individuals and family offices, expect distributions to commence by the fifth year.

“That LP capital is patient capital is a misnomer in the Indian context, as early returns are often baked into expectations,” he emphasised.

Of course, competitive pressure will always be there. In the fast-moving world of venture capital, quick exits, often within 2.5-4 years, are worn by fund managers as badges of honour. Conversely, patient capital’s contrarian approach sets it apart from the rest, said Rajaram of Speciale Invest.

Sectors like climate tech and deeptech often warrant that kind of patience. Bhammer noted that these bets might take longer to mature, but the potential payoff would be outsized. “Take nuclear fusion, for example. It can upend the fossil fuel economy, and that’s why capital keeps flowing in,” he said. In such cases, the near-term opportunity is a calculated trade-off against the possibility of transformative, long-term returns.

However, investors seeking consistent returns cannot afford to rely on a single strategy. Both Singhal and Rajaram said long-horizon investments would require strategic capital allocation, akin to balancing a personal portfolio across high-risk and conservative assets. Discipline, not blind conviction, is the key to success.

How India’s Patient Capital Playbook Is Taking Shape

Quantifying the availability of patient capital in India is challenging, but most investors agree on one point.

Domestic contributions to long-horizon, high-risk funding remain scarce.

Despite growing interest in innovation-led sectors, Indian investors have yet to support categories that require long-term commitment. For instance, sectors such as agritech and electric mobility — where patient capital is most critical — rely heavily on overseas funding. According to Bhammer, as much as 95% of patient capital in India comes from global investors, with just 5% originating locally.

That balance, however, is shifting. Although Indian venture funds have historically relied on foreign LPs, there is now a visible uptick in domestic participation, said Singhal.

Family offices, fund-of-funds and HNWIs across the country are becoming increasingly active, and a few have been backed by Indian LPs. The overseas-to-domestic capital ratio is now close to 80:20, according to investors.

India is slowly laying the groundwork for patient capital, the long-term investment crucial for innovation-heavy or impact-driven sectors. The trajectory is promising, but the local system remains nascent. It is not yet transformational.

It also raises a broader question: When does a startup need patient capital? And what does it take to manage that capital across an ecosystem where time horizons are often mismatched?

Balancing Founder Vs LP Expectations

Globally, success is increasingly defined by intellectual properties (IPs) anchored in emerging technologies. Recent strides in GenAI in the US and China, as well as Taiwan’s leadership in the semiconductor space, are excellent examples of how long-term investments — both public and private — form the core of deep R&D and rich dividends.

In India, a growing number of deeptech startups, backed by government initiatives and venture capital, suggests a similar trajectory is taking shape. With the country recently overtaking Japan as the world’s fourth-largest economy, a rise in long-horizon investments could help power its ambitions to emerge as a $5 Tn economy by 2027 and the third-largest.

Patient capital is crucial for sectors with long innovation or impact cycles and high levels of uncertainty. But the patience it demands often clashes with the venture world’s ingrained appetite for faster returns. Startup founders may eagerly seek investors who can wait to build something of lasting value. However, LPs — the real source of venture capital — still expect performance within defined windows.

“The key is to be upfront,” said Bhammer. “Founders need to know if you are in for the long haul or expecting quicker exits. That clarity at the outset prevents later misalignments.”

Yet transparency is not a silver bullet. Founders must also feel safe in acknowledging when things are not going as planned. Without that space to pivot, startups risk stagnating under mismatched expectations or may go sideways.

Again, managing LP sentiment is a daily exercise in calibration. “Some LPs are aligned with the long-term thesis. Others aren’t,” said Singhal. “When you have 40, 50, even 100 LPs, you are constantly managing different expectations.”

One recurring pain point is illiquidity. “If you are a business owner who has invested in a VC fund and your business suddenly hits a downturn, you face a liquidity crunch but can’t just pull your money out,” explained Singhal. “That creates real tension, especially in volatile markets.”

Even when founders and investors begin in sync, long cycles may cause friction, from investor fatigue to strategic drift or shifting priorities. “Some founders interpret patient capital as a 10-15 year runway with no urgency. But that is not the case,” said Rajaram. “Therefore, we closely engage with them and tell them that we are here for the long journey. But there are still performance expectations.”

To ease LP concerns around long timelines, Rajaram underscored how thoughtful fund structuring could balance expectations.

“At Speciale Invest, we stagger capital deployment over four years. Naturally, startups backed in the very first year have a long runway to mature and are more likely to see exits earlier than those backed in Year 4,” he said.

That staggered deployment model enables progressive liquidity, meaning some liquidity will be available in Year 5 or 6. “That pacing helps bridge LP needs with the reality of building durable companies. Not everyone has to wait for returns until Year 8 or 9,” he added.

In sectors like deeptech, where IPOs are rare and often take time, exits are frequently achieved through strategic acquisitions or secondary sales. These off-cycle exits or liquidity events (such deals are usually lapped up by corporate houses or late stage investors) can also align with LP expectations without derailing the long-term vision. “You can still be patient,” said Rajaram. “But you need structure.”

Ultimately, the fund manager’s role is to align divergent clocks — founders pursuing bold but time-intensive bets and LPs focussing more on quarterly reports of their multi-asset portfolios. That alignment, built on trust, milestones and adaptable pacing, makes patient capital more than a theory. It’s what makes it work.

Will Indian LPs Step Up Long-Term Bets?

With a vast domestic market, home to more than 1.61 Lakh startups as of January 2025, an extensive pool of tech talent, and a strong digital ecosystem, India presents a compelling case for long-horizon VC investments. Government initiatives such as Make in India and production-linked incentive (PLI) schemes further reinforce the push towards innovation-driven growth.

But in spite of this solid foundation, domestic fund managers continue to face a familiar hurdle: Mobilising homegrown LPs, especially family offices and institutional investors, to commit to patient capital strategies.

Most Indian LPs remain cautious, but much of this sentiment stems from inconsistent past returns and the absence of a clear investment playbook. VCs argue that domestic patient capital at scale will only follow when LP goals are better aligned with broader startup objectives, including technological self-reliance, import substitution and job creation.

As Bhammer observed, unless LPs buy into a fund’s long-term vision, they are unlikely to stay the course, especially in high-risk or complex sectors.

Industry insiders think policy nudges may help increase LP participation. These measures may include tax benefits for R&D investments, government-backed co-investments in strategic sectors and simplified regulations for fund formation. Reducing operational and compliance friction will ease fund management and boost investor confidence, eventually attracting more capital.

There are signs of progress. According to Singhal, more Indian LPs are stepping in. A growing number of funds are now backed — at least partly — by domestic capital, while family offices prefer exposure through managed funds instead of direct investments in startups. Overall, the perception of venture capital is evolving from speculative bets to a structured asset class.

Change is slow, but it is underway. The once-lopsided domestic-to-foreign LP ratio is gradually rebalancing. Indian investors are becoming increasingly savvy, thanks to stronger governance, clearer SEBI regulations and greater familiarity with venture cycles. As India stakes its claim in the global race for innovation and sustainable growth, cultivating a deeper domestic pool of patient capital is not just desirable — it is imperative.

Edited by Sanghamitra Mandal