India's Rukam Capital Rides Rising Startup Story

Tom Burroughes

26 July 2024

Venture capital is the best way to play India’s growth story, expected to expand by 6.8 per cent this year and on course to be the third largest economy in the world by 2030, an investment firm says.

New Delhi-based – a firm founded in 2019 – is something of an evangelist about venture capital and argues that it fills a gap in early-stage funding in the country’s startup ecosystem.

Rukam Capital is in the process of raising money for its second fund – “Rukam Sitara” – aiming at a target size of $50 million. At its first close, it achieved $19 million. There is a pipeline of five startups; the sectors targeted are generative AI, deep tech robotics, semiconductors, software-as-a-service, and climate tech.

The first fund, which has a size of $19 million, was set up to invest early in consumer products and services companies. Its largest sector allocation, in percentage terms, is food and beverages (56 per cent), followed by beauty and personal care (18 per cent), and then by home and kitchen (15 per cent).

“India now has the third largest startup ecosystem in the world and that is fuelled by venture capital investment. So, it is VC investment that ultimately helps to drive Indian growth, which means that VC investment is a compelling way to participate in the growth story,” Archana Jahagirdar, founder of Rukam Capital, told this news service.

The pace of venture capital growth in India has been rapid: between 2020 and 2022, the number of “unicorns” (startups valued at $1 billion plus) trebled to more than 100 and the number of startups increased by over 50 per cent to 57,000 with a combined valuation of more than $450 billion. The number of startups in India rose from 57,000 to 68,000 last year. The number of unicorns has also continued to grow.

According to has given India’s tech space its thumbs up. In a recent report on Indian tech trends, the accountancy giant and consultants said: “India stands out as a hub of innovation and opportunity in a constantly changing landscape, where tradition and modernity converge to create a vibrant ecosystem full of possibilities.”

As for consumer spending, it is set to double by the end of this decade. Large rises of wealth in India are powering equally rapid growth in the consumer sector.

Jahagirdar said she founded the firm after having learned mistakes with a startup she had in the visual arts space and had no available capital. “This in turn meant that my business had no escape velocity. And during that time, I met up with a lot of people who were either trying to start their own ventures or were investors and it became clear to me that this was a space where I could be a meaningful participant in the India growth story,” she said.

Within its first fund, 90 per cent of portfolio companies have revenue growth of more than four times since Rukam’s initial investment; 42 per cent of the firms have chalked up revenue growth of four to seven times; a quarter have witnessed growth of more than 10 times.

This news service has carried several articles about India and its investment story. See examples here and here.