India’s VCs turn to sector specialists as thematic funds surge

Once defined by broad bets, generalist funds are now hiring industry specialists to stand out in a market where capital alone no longer suffices. According to industry experts, these hires are reshaping how deals are sourced and companies are built.

Sector experts help with due diligence, advise on growth plans—both organic and inorganic—and guide founders on when to cash out. The shift reflects intensifying competition from thematic funds, as both founders and limited partners show a preference for investors who bring operating experience and domain knowledge.

Elevation Capital, Z47, Together Capital, Lightbox, and Claypond Capital are among firms that have added sector specialists over the past two years. Artha India Ventures is also in talks to bring in domain experts, executives said.

The pressure is clear. British International Investment has said it plans to make more equity bets in specialist funds as a limited partner, according to a VCCircle interview. More than $3.5 billion has been raised so far in FY26 by about 20 early-growth stage funds, signalling a thawing of the funding winter.

While fund-raising slowed to $4 billion in 2023, domestic VCs became significantly more salient, driving more than 90% of the raises and launching several thematic funds focused on emergent themes, Bain Capital said in a report last year.

In March, the consultancy firm said that several maiden funds have risen in prominence over 2024, constituting nearly one-third of the $2.7 billion VC/growth capital raised, targeting themes such as sustainability, agriculture, defence, sports, and gaming.

For instance, homegrown investment platform 360 One has launched several thematic funds including for healthcare, consumer and manufacturing over the last 12-18 months. Other new thematic fund launches include Boundless VC, Healthkois, Yali Capital, L Catterton India, and Synapses, which are targeting sectors such as artificial intelligence (AI), deeptech, climate-tech, health-tech, and consumer brands.

Other sectors have also seen similar fund launches – Spyre, Cedar Capital, Audacity, Caret Capital, SenseAi, Good Capital, Avaana Capital & Aavishkar Group (climate change thesis) and Omnivore (food & Agritech), according to Mint’s research.

Specialist funds are already shaping deal activity. Beams Fintech Fund led a $40 million round in Infinity Fincorp Solutions and a $70 million round in InsuranceDekho. L Catterton, a consumer-focused private equity (PE) firm, invested $40 million in snacking brand Farmley. Hyderabad-based Aragen Life Sciences raised $100 million from Quadria Capital, a healthcare-focused PE firm.

Hiring spree

Until recently, most sector-agnostic firms operated with broad teams. That is changing.

“In the last two years, there have been almost 100 hires in VC funds where the talent has come from an operating background. This constitutes about 16% of overall talent moves,” said Sonali Puri, managing partner at Native, a headhunting firm focused on the PE-VC industry. “With the technology landscape moving so fast, funds feel it is important to have a blend of both investment and operating experience.”

Recent hires illustrate the trend. Claypond Capital hired Shreyans Gangwal from Fireside Ventures in May last year. Elevation Capital brought in former Meta executive Krishna Mehra in December 2024 for AI. Together Fund added ex-Freshworks leader Sethu Chidambaram in October 2024 for AI and SaaS. Z47 tapped Mohit Sadaani, co-founder of The Moms Co., in August 2024 for consumer.

In June, Bessemer Venture Partners appointed Pankaj Mitra as a partner who will focus on the global venture capital firm’s investments in AI, enterprise tech and cybersecurity in its India business.

Even established funds are tilting. Lightbox brought in Ashish Bhargava from True North to deepen its consumer bets. While Lightbox has invested across fintech, health, hiring, and travel, its new fund will lean more heavily on online-first consumer brands, after successes with Rebel Foods, Bombay Shirt Company, and wellness brand Nua, partner Sandeep Murthy told Mint.

Key Takeaways

• Indian VC funds are shifting from generalist investments to hiring sector specialists for a competitive edge.
• Knowledge and operating experience are now more valuable to founders and LPs than capital alone.
• To compete, established funds are actively hiring experts and creating dedicated sectoral teams.
• Reports show domestic and thematic funds are becoming dominant, driving the bulk of of new raises.
• Focused funds provide an edge by offering specialized guidance and playbooks to help startups scale efficiently.

A maturing market

Peter Lui, principal at LGT Capital Partners, which has invested in Kedaara Capital, ChrysCapital, Peak XV Partners, and Nexus Venture Partners, said that while India’s market has been largely generalist compared to the US, Europe, and China, where sector-focused funds are more established, it is beginning to evolve.

“The market is maturing, with generalist firms increasingly hiring sector specialists to strengthen their due diligence and deal underwriting,” Lui said.

Founders say they can tell the difference.

“Even within generalist platforms, investors are carving out sector teams,” said Vinay Singh, founding partner at consumer-focused Fireside Ventures. “Our ability to spot what can and cannot scale is higher because we’ve exclusively seen very similar businesses repeatedly.”

Avnish Chhabria, founder of Wellbeing Nutrition, which is backed by Fireside and Hindustan Unilever Ltd, agreed. “They helped us focus on unit economics, inventory turnover, retail depth, store count, cash flow budgeting and management, which allowed us to stay nimble,” he said.

Fireside also guided the company on retention funnels, long-term value metrics, and warehouse software. “A focused fund has a 100% edge over generalists as they have solid playbooks for every situation that may arise,” Chhabria said, adding that such playbooks have been instrumental in assisting and scaling a business from 0 to ₹2 crore, to ₹10 crore and eventually to ₹50 crores and more.

Generalist funds still enjoy the flexibility of investing across sectors, but even they are moving to hire domain experts or set up sectoral pods to avoid losing ground.

“The trend is real, and we’ve seen it unfold in boardrooms and in the résumés crossing our desks,” said Sandesha Jaitapkar, COO at Artha India Ventures, which is selectively hiring specialists in healthcare, climate tech, and enterprise software, areas where regulation and fast-changing technologies make domain expertise critical.

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