In 2023, Shreshth Mishra faced a challenge. His Bengaluru-based electric two-wheeler start-up, Simple Energy, needed funding to expand production and enter new markets. But raising capital was tough. Start-up funding had dropped, especially for manufacturing businesses like his.
Unlike software start-ups, electric vehicle (EV) manufacturing requires significant upfront investment and longer timelines before generating returns. Many investors were hesitant. However, family offices viewed the opportunity differently. They understood the manufacturing model, including its capital intensity, operational challenges, and long gestation periods.
Family Offices Step In
Family offices led Simple Energy’s bridge round, helping it raise $20 million, one of the largest investments in the EV start-up space. This was just the beginning. The company went on to secure over $77 million in debt and equity, with substantial contributions from family offices like Haran Family Office, Arokiaswamy Velumani’s Family Office, Vasavi Family Office, and the Desai Family Office.
Simple Energy’s experience is not isolated. Family offices are increasingly becoming the preferred choice for founders. They often step in when foreign investors withdraw. For example, when Aakash Educational Services, India’s leading test-prep company, faced a debt crisis due to its parent company Byju’s troubles, Manipal Group chairman Ranjan Pai intervened through his family office Claypond Capital, investing nearly ₹1,400 crore.
These instances highlight a broader shift in India’s start-up ecosystem. For nearly two decades, the sector relied heavily on foreign capital. However, as overseas investors become more selective, domestic capital sources, particularly family offices, are filling the gap.
India’s family offices, managing an estimated $30 billion in assets, have participated in over 1,300 start-up funding deals since 2014. Their involvement extends beyond capital. Founders appreciate the understanding and long-term perspective they bring.
“Family offices brought an understanding of what it takes to build something from scratch, the ups and downs, the setbacks, and the need to stay focused on sustainable growth,” says Mishra.
The relationship between founders and family offices often differs from traditional venture capital trends. Instead of being seen solely as financial backers, family office principals frequently act as long-term advisors for founders.
“We are not trying to squeeze founders or become adversarial. We try to become long-term partners, big brother and a positive team,” says Vivek Oberoi, actor-investor and chairman of The Oberoi Family Office.
This relationship-driven approach is a recurring theme among founders. Family office principals often remain involved through major business milestones and sometimes even personal events.
“We are not only looking for capital but also for the value, perspective and long-term thinking they bring to the table,” says Sanjay Nekkanti, co-founder and chief executive, Dhruva Space, a space-tech company.
The Start-Up Appeal
India’s start-up ecosystem is the third largest in the world after the US and China. This rise, from a few hundred in 2016 to more than 1.5 lakh today, shows the critical role private capital has played in building the ecosystem. And family offices want to be active participants in this growth. They are drawn to the possibility of generating returns that outpace traditional investments.
Venture investors typically target net internal rate of return of 20–30%, compared with annual returns of roughly 12–14% from leading stock indices like Nifty 50 and Nasdaq, and 8–12% from real estate, making start-ups attractive avenues despite their higher risk.
Family offices are betting on this attractive return potential. They are either investing indirectly as limited partners (LPs) in VC funds or directly through their family offices.
For many families, the first point of entry was the LP route. It provided exposure to venture investing without requiring them to build in-house start-up investing capabilities. As start-up investing gained traction, the number of family offices in India grew from 45 in 2018 to around 300 in 2024, according to PwC, a consultancy.
Over time, however, many family offices began shifting towards direct start-up investments as these offer a favourable cost structure.
VC funds typically operate on the “2 and 20” model, charging a 2% annual management fee and taking 20% of profits as carried interest on realised gains. With direct investments, family offices avoid these fees, exercise greater control over investment decisions and build direct relationships with founders.
But it’s more than economics. Generational change inside family businesses has a big role in this shift towards start-ups. As younger scions returned from global universities and professional stints abroad, many found themselves more drawn to technology start-ups over traditional asset classes.
Besides, founders who once struggled to raise seed capital are now celebrated on television, social media and industry stages.
Shows such as Shark Tank only amplified this trend, turning start-up investing into an aspirational pursuit.
For the younger generation of wealthy families, backing start-ups became a way to participate in India’s innovation story rather than merely managing inherited wealth.
