Mumbai-based Equirus Capital has launched a ₹1,500 crore private equity fund in October, targeting profitable late-stage companies as India's startup funding market enters a more selective phase. According to Srinath Srinivasan, chief investment officer, alternative markets at Equirus, the fund comprises a ₹750 crore base corpus and a ₹750 crore greenshoe option, with the seven-year vehicle expected to achieve its first close in the next couple of months. The fund will focus on consumer, financial services, industrial manufacturing, and healthcare companies that can provide a liquidity event within three to four years. As per Mint, the fund will avoid backing loss-making businesses unless there is conviction for a quick turnaround, with Srinivasan emphasizing that "the idea is to back traditional companies of scale that may not dominate headlines, but have proven metrics and can deliver a liquidity event in three to four years."
The launch reflects a broader market trend where investors are prioritizing margins, liquidity and exit visibility over rapid growth. According to Tracxn's FY25-26 India Tech report, late-stage funding fell 38% year-on-year to $5.6 billion in FY26, while early-stage funding rose 33% to $4.8 billion. Overall funding declined 18% to $11.7 billion in FY26, with $100 million-plus rounds dropping to 13 from 23 in FY25. Recent rounds by Emergent ($70 million), Sarvam AI ($234 million), Juspay ($50 million), and Scapia ($63 million) demonstrate investor appetite concentrated in businesses with stronger execution and clearer scale potential. The reset has been especially visible in consumer and fintech sectors, with traditional businesses facing scrutiny while D2C brands struggle with economics despite revenue scaling.
Srinivasan emphasized that the fund will maintain strict discipline on valuation and avoid chasing businesses simply because they are growing fast. "At the end of the day, an investor's first job is to make sure the business case supports the valuation," he said. "If it does not, then it is better to wait." The fund's investment horizon of seven years influences decision-making, with Srinivasan noting that "if the horizon is 10 years or more, the fund may wait longer for a thesis to play out. But if the horizon is seven years or less, then investment decisions will focus on the investee company's margins, growth and exit potential." This represents a sharp shift from the 2021-22 investment cycle when capital was abundant and price-to-sales multiples often drove deal underwriting. As Srinivasan explained, "In 2019-21, many investors underwrote deals on price-to-sales and assumed they could exit at the same or a better multiple. The model has not worked well, and investors now need to think more carefully about what they are paying for, why they are paying it and how valuation will move over time."
Srinivasan believes the next wave of liquidity will come through secondary transactions and acquisitions rather than public listings alone. According to Venture Intelligence data, India saw 51 secondary VC transactions worth $1.1 billion in 2025, up from 45 deals worth $1.5 billion in 2024. Startup M&A activity remained steady with 214 deals worth $6.7 billion in 2025, versus 162 deals worth $8.2 billion in 2024. Notable consolidation deals include L'Oréal's acquisition of a majority stake in Innovist, HUL's buyout of Minimalist, and Marico's purchase of Plix. Srinivasan noted that "the question is really whether it is distressed or whether there is actual value in people going to acquire it," indicating a more discerning approach to secondary market activity.
