How family offices are propelling the Indian startup ecosystem
From just 45 in 2018, India now hosts over 300 FOs, including mature single-family offices and those operating through multi-family offices or hybrid models to manage their family assets, preserve value systems, and create wealth.
India remains the fastest-growing economy among the emerging markets with an estimated growth rate of 7% in FY25. The global geopolitical tensions—coupled with China’s economic slowdown and the BRICS nations' limited capacity to offer competitive products and services—present a unique opportunity for India.
However, to fully capitalise on this, leveraging the soft powers—skilled manpower, the entrepreneurial culture, and vibrant markets—is essential, with a special focus on innovation, research, and digital adoption.
Traditionally, India’s risk appetite has been limited, which stifled the Indian entrepreneurial spirit for a long time. However, the economic liberalisation in the early 90s unleashed a wave of innovation and entrepreneurship in the country with the ease of doing business and the inflow of global capital.
It gathered momentum following the young professionals’ greater exposure to global technology hubs, ideas, and markets, and it is the genesis of creating one of the world’s most vibrant startup ecosystems today.
In 2023, India added 94 billionaires—second only to the United States—bringing the total to 271. The rapid wealth accumulation among entrepreneurs and business families has led to a surge in family offices (FOs) over the past decade.
From just 45 in 2018, India now hosts over 300 FOs, including mature single-family offices and those operating through multi-family offices or hybrid models, to manage their family assets, preserve value systems, and create wealth.
The saying ‘if you’ve seen an FO, you’ve seen only one’ reflects the uniqueness of each FO in and outside India, having distinct features, objectives, and risk appetite.
Globally, FOs have been playing a vital role in funding and mentoring startups and tech enterprises. They invest in startups for various reasons—from strategically expanding existing businesses through new technologies to differentiated business models to diversifying capital for higher returns over time.
Historically, the domestic equity market has been offering a 12-14% return, while private markets can yield an internal rate of return (IRR) of 20-30% or more, depending on the level of risk the FOs are willing to take.
Some FOs, such as the Kamath brothers of Zerodha, invest to mentor and contribute back to the existing startup environment. Premji Invest, the family office of Azim Premji, has been a pioneer in investing in young enterprises and has an equity stake in 19 unicorns in India and abroad.
Similarly, Claypond Capital—the family office of Ranjan Pai—has significant investments, including in the education sector. FOs make such investments either directly or through established fund managers.
Globally, nearly one-third (32.5%) of the total capital invested in startups in 2022 came from the FOs. Furthermore, the family office-backed deals accounted for 10.1% of all startup investments in the same year.
In terms of the percentage of capital invested in startups by FOs relative to the total capital invested, India ranked third with over 40%, just behind Germany and the UK—underscoring the growing relevance of FOs in the Indian startup ecosystem.
Usually, startups get early-stage capital from various sources, including funds, corporate entities, and FOs. However, family offices offer distinct advantages that include patient capital, mentorship, credibility, and strategic benefits, making them a preferred source of capital for budding enterprises.
Of late, FOs are increasingly acquiring larger stakes in companies and often assuming management roles. It is particularly true for mature startups that have achieved product-market fit, established sustainable business models, assembled experienced teams, and demonstrated a clear path to profitability.
Family offices also act as facilitators for corporate acquisitions, providing exits for early-stage investors and playing a critical role in a startup’s lifecycle—from seed funding to exits for mature businesses. Conversely, startups are also instrumental in serving the financial and strategic goals of the FOs—forming a mutually beneficial relationship.
The growing number of billionaires and Ultra High Net-worth Individuals (UHNI) will create more FOs in India, which will result in strengthening the country’s digital prowess, innovations, and digital revolution.
Hopefully, the cycle of the rising number of FOs and increasing digital adoption converge into a future of inclusive and sustainable growth, fuelling entrepreneurship and thought leadership and unleashing revolutions for all citizens of India.
(Dhruv Chopra is the Managing Partner at Dewan P. N. Chopra & Co.)
Edited by Suman Singh
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)