Mitsubishi UFJ Financial Group (MUFG)-backed Dragon Funds is seeking to raise its second fund with a $600 million corpus to invest in high-growth startups, according to Aakash Tulsani, managing director and investment committee member at the firm. The fund will formally begin raising money next year and will continue to focus on sectors such as late-stage financial services, consumer and enterprise, targeting companies that have the potential to grow faster while maintaining a sustainable business model. The firm expects to deploy cheque sizes of $50-80 million across its portfolio companies, as reported by Livemint.
Dragon Funds' first fund was about $500 million in size, of which $400 million has already been deployed across 8 companies across India alongside other global markets. According to reports, about half of the capital has been invested in Indian startups including Moengage, Meesho, Zepto and KreditBee, making India one of its core areas of focus. The firm's other portfolio companies include Vinted, CarDekho SEA, Bolttech and Cohesity. The investor's India portfolio notably includes Meesho and Zepto, demonstrating continued appetite for scaling Indian consumer and retail-tech platforms. This move underscores the growing interest from foreign investors in the Indian startup ecosystem, particularly in sectors like financial services and consumer technology.
Tulsani emphasized the firm's commitment to deepening presence in the India-Japan corridor, stating that Japan's MUFG Group backing serves as a key differentiator. As reported, the firm wants to enable scale-ups and explore partnerships with Japanese firms while helping portfolio companies expand overseas by leveraging MUFG's vast global presence. Examples include companies like Cohesity, Bolttech, and Moengage that have some presence in Japan, with Tulsani noting that Japan is one of the most underpenetrated software markets with high growth prospects. The planned $600 million vehicle signals continued appetite for scaling Indian consumer and retail-tech platforms, potentially expanding capital availability for high-growth retail partners and suppliers while enhancing opportunities for Indian startups to scale internationally.
The comments come after MUFG and its subsidiary MUFG Bank announced plans to integrate the operating functions of Ganesha Fund, which invests in Indian startups, with Dragon Funds to consolidate management of their corpus. According to reports, Ganesha Fund has made growth investments in companies including Shiprocket, Neo Wealth and Lentra. Tulsani explained that the aim was to consolidate MUFG's strong partnership with India's tech ecosystem and play a meaningful role in the growth equity space in India, despite a slowdown in growth rounds by 20-25% in recent months. This strategic integration strengthens the firm's position in the India-Japan and Asia-Pacific corridor.
Launched in 2023, Dragon Funds has attracted domestic and international investors with opportunities in high-growth markets around the world, including India. The investment firm will continue focusing on late-stage technology companies and cut cheques in a range of $50-80 million. Tulsani highlighted that sectors like financial services stand out for the firm in India, stating they are seeing many interesting opportunities emerge in the space and aim to marry patient capital with evergreen companies to play a meaningful role in India's tech ecosystem. This establishment of the second fund represents a significant development for Indian retail investors, as it underscores the growing interest from foreign investors in the Indian startup ecosystem.
