In recent years, Indian family offices have steadily emerged as significant players in the investment landscape, often competing with global venture capital (VC) firms for the hottest startup opportunities. The financial year 2024-25 has witnessed a notable shift in the dynamics between Indian family offices and international VCs, with the former seemingly outbidding their global counterparts in securing stakes in high-growth ventures. The question that arises, therefore, is whether Indian family offices have truly outperformed global VCs in FY 2024-25, particularly when it comes to backing some of the most promising startups.
Indian Family Offices: The Rising Powerhouses
A family office is a private wealth management advisory firm that serves high-net-worth individuals (HNWIs), typically those with significant family wealth. Unlike traditional VCs, family offices are often less risk-averse, have a long-term investment horizon, and can make faster decisions due to their independent nature. These offices typically manage a range of assets, including equities, real estate, and, more recently, venture capital.
Indian family offices, while still relatively young compared to their Western counterparts, have grown exponentially in size and influence over the past decade. Some prominent examples include the investments made by the Adani Group‘s family office, the Reliance Family Office, and the promoters of successful Indian businesses like Flipkart and Zomato. These family offices are no longer just passive investors—they are actively shaping the future of the startup ecosystem.
While venture capital firms often focus on achieving quick exits and returns, family offices in India have taken a more strategic approach. Their investments reflect a blend of diversification, long-term value creation, and a strong focus on scaling Indian businesses in domestic and international markets.
How Indian Family Offices Are Outbidding Global VCs
The financial year 2024-25 has witnessed a unique trend where Indian family offices have been able to outbid global VCs in securing equity stakes in several promising startups. One key reason for this shift is the ability to make quick and flexible decisions without the layers of approval that often come with VC funds. Indian family offices have also shown an unparalleled commitment to investing in sectors witnessing rapid growth, such as health tech, fintech, edtech, and consumer services.
Take, for instance, the case of Cult.fit, one of India’s most successful health and fitness brands. Backed by a combination of Indian family offices, including investments from the brand, it is supported by Hadley Family Trust, Makan Family Trust, Pratithi, and RTNA Associates. Cult.fit has significantly outpaced global VCs in its growth trajectory. Despite global VCs like Sequoia and Accel also backing healthtech ventures in India, family offices were able to make an early, significant investment in Cult.fit that positioned them as major stakeholders—giving them a larger voice in the company’s strategic direction.
Cult.fit’s recent valuation has exceeded $1.4 billion, and much of that growth can be attributed to the personalized and high-calibre investment support provided by Indian family offices. In contrast, global VCs have been more cautious, balancing risk and reward, which has often led to delays in their investments or dilution of their stakes when other investors swooped in.
This flexibility is particularly beneficial when timing is crucial in high-growth sectors, where early-stage capital can make all the difference in a company’s ability to scale quickly. Family offices are typically less constrained by the same liquidity pressures that VCs face, allowing them to stay the course and commit more capital even in uncertain market conditions.
What Sets Indian Family Offices Apart?
Indian family offices are often able to outbid global VCs due to a combination of factors that make them attractive as investors for early-stage startups:
- Long-Term Investment Horizon: Family offices typically take a longer-term view of investments, looking to support businesses for years, if not decades. This appeals to startups that may take longer to mature than a venture-backed company.
- Flexibility and Speed: Unlike global VCs, which often have multiple layers of decision-making and are subject to various committee approvals, family offices are empowered to make quick decisions. This speed can be crucial when startups are looking to raise capital quickly, or when an urgent need arises to outbid competitors.
- Value Beyond Capital: Indian family offices bring a wealth of expertise, industry connections, and operational know-how beyond financial support. This strategic guidance helps startups grow, scale, and navigate complex challenges, making them attractive partners.
- Sector Focus: Many Indian family offices tend to focus on sectors with which they are closely familiar, such as healthcare, technology, and retail. This expertise allows them to make more informed decisions and identify and act on opportunities faster than global VCs that may lack local knowledge.
- Diversified Portfolios: Indian family offices tend to have more diversified portfolios, which makes them more willing to take risks in emerging sectors. They have the flexibility to balance out their investments across more stable and high-growth opportunities, whereas global VCs might follow a more specialized approach.
Companies That Indian Family Offices Have Invested In
Several companies in India have seen substantial backing from family offices over the past fiscal year. These investments highlight the growing influence of Indian family offices and their strategic approach to supporting homegrown ventures.
- fit (Cult.fit’s Parent Company): As mentioned earlier, Cult.fit has benefitted from strategic investments from Indian family offices. The fitness startup has witnessed rapid expansion, especially in the digital health space, which was particularly beneficial during the post-pandemic recovery phase.
- Fynd: A retain technology company acquired by Reliance Industries, Fynd attracted investments from family offices focused on retail tech and consumer goods. Its growth potential, bolstered by its integration into Reliance’s ecosystem, showcased how family offices are playing a crucial role in reshaping industries.
- Razorpay: Razorpay, one of India’s leading fintech platforms, has also seen considerable interest from Indian family offices, positioning them as significant stakeholders in the future of India’s fintech revolution.
The Real Question?
In FY 2024-25, Indian family offices, exemplified by their backing of companies like Cult.fit, demonstrated a remarkable ability to outperform global venture capital (VC) firms in terms of returns and strategic growth. Unlike traditional VCs, Indian family offices often take a long-term, patient investment approach, allowing them to weather market volatility and focus on sustainable value creation. Their deep understanding of the local market, and flexibility in investment timelines enabled them to make more informed and culturally aligned decisions. Companies like Cult.fit, which blends health and fitness with technology-driven services, capitalized on this approach by rapidly scaling in an underserved market. Family offices, with their focus on high-growth, scalable sectors such as health tech and consumer services, were able to spot emerging opportunities early, often outpacing global VCs who were more cautious in the face of macroeconomic uncertainties. This trend reflects the growing strength of Indian family offices in shaping the future of local entrepreneurship while generating outsized returns compared to their global counterparts.
