Post by Kuldeep Kumar Gautam

India is one of the world's fastest-growing, consumption-driven economies. It continues to produce high-growth startups across fintech, SaaS, healthtech, AI, logistics, and consumer technology. So why are many India-focused venture capital funds finding it harder to raise capital? At first glance, the answer seems simple: the rupee is weakening. But the story goes deeper. Most global LPs evaluate performance in dollars, not rupees. This means that even when a venture fund generates strong returns, part of those gains can disappear when converted back into dollars. As a result, many investors are now demanding higher returns to compensate for currency risk. According to recent industry commentary, LPs that previously targeted returns of 8–11% are now looking closer to 13–16%. That is a significant increase in the hurdle rate. One fund manager noted that a portfolio exit that generated a 2.2x return could have delivered closer to 3.5x had the rupee remained stable during the investment period. But the challenge isn't only currency. Global capital has alternatives. Today, investors can allocate money to India-focused funds or pursue AI-driven opportunities in the US, where venture capital is chasing the next generation of technology winners. As capital becomes more selective, India is competing not just with other emerging markets, but with some of the most exciting investment themes in the world. Yet the long-term case for India remains compelling. India continues to combine a large domestic market, growing digital adoption, entrepreneurial talent, and a vibrant startup ecosystem. The question is whether startup quality alone is enough. Or whether attracting long-term global capital also requires currency stability and a stronger domestic investor base. Perhaps the next phase of India's startup ecosystem will be defined not only by building great companies, but by building the capital base needed to support them. REPOST this to help others. #Finance #Investmentbanking #linkedin Parth Verma Source: Moneycontrol