He presented a broad overview of the current trends and structural shifts that are shaping India’s startup ecosystem.
Kamath opened by reflecting on how foreign the term “VC” sounded when he started Zerodha in 2010. “VC was an exotic term, and there was barely any startup activity. The most popular VCs were dads, uncles and aunts,” he wrote.
However, the picture began changing around 2010, driven largely by what Kamath called India’s “opportunity size.” Highlighting India’s vast consumer base, he wrote, “India’s population has done more to attract VC money than anything else. ‘India has 120 crore people, and even if 1% buy X’.”
Kamath noted that early interest concentrated around e-commerce and fintech sectors like lending and payments. These were viewed as the low-hanging fruit. But as those opportunities saturated, Kamath said, “You truly have to do something special to make VC-like returns.”
This has led to a noticeable shift toward more challenging, complex areas, such as deep tech.He further stated that the transformation is not restricted to VC activity alone but extends to the entire startup ecosystem.“Cheap Internet has spread talent and aspiration beyond metros into rural India. Better education means more risk-takers, and the growing economy attracts global institutional capital,” he explained.
Kamath pointed out that infrastructure to support entrepreneurship is also developing through government and academic initiatives such as Atal Incubation Centres, BIRAC, Venture Centre in Pune, and incubators at IISc, IITs, and other colleges. He also acknowledged the role of strong mentorship in turning ideas into viable businesses and noted that entrepreneurship has become “aspirational in parts of the country.”
On the funding side, Kamath said, “Every wealthy individual now has a ‘family office,’ and there’s a global rush into VC/PE. Stocks and bonds are boring; private investing is popular among the wealthy.”
He conceded that while “there’s stupidity,” the overall trend remains “net positive.” He also credited the rise of smaller angel investors, reinvestments from exited founders, and corporate interest—including his own investment firm Rainmatter—for contributing to the funding pool.
“These factors create feedback loops, building a vibrant entrepreneurial ecosystem,” Kamath wrote. He also observed that this growth is taking place in the backdrop of a changing geopolitical climate, where “globalisation becomes a dirty word and geopolitics forces countries toward self-sufficiency,” although he refrained from offering a personal view on whether that’s good or bad.
In his concluding remarks, Kamath expressed optimism about the future: “I’m hoping this ecosystem grows wider and deeper, with many more Indian startups solving local and global problems.”
Accompanying his post was a chart showing annual VC investments in India from 2010 to 2025. According to data sourced from Bain and KPMG, VC funding has surged from $0.8 billion in 2010 to a peak of $38.5 billion in 2021, followed by a moderation to $9.9 billion in 2025.
ETMarkets.com(Source: Nithin Kamath/X)
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