VC Caution Persists Despite India Market Stabilization

Venture capital activity in India is stabilizing after a significant downturn, yet investor caution persists. Rahul Chandra, Managing Director at Arkam Ventures, notes that investors are highly conscious of pricing risk and the unpredictability of follow-on funding. Global macro disruptions are also influencing venture investing, leading to delayed IPO timelines.

Arkam Ventures is focusing on three core sectors: fintech, aiming to build foundational elements for future scaling; AI, exploring both B2C and B2B applications; and manufacturing-led deeptech, emphasizing IP-driven opportunities in areas like space tech. The firm recently participated in a substantial seed round for Optimist, a home appliance company with a developed product and a strong founder.

Chandra highlighted that valuations are disciplined due to the ecosystem's awareness of potential funding gaps. While global events are short-term disruptions for venture capital, India's market is increasingly seen as a stable and resilient destination for capital. Arkam's exit strategy is IPO-oriented, typically targeting companies that can go public within six to seven years of their Series A investment.

Within fintech, Arkam is interested in infrastructure that helps banks manage scale, especially with the rise of UPI. Despite a crowded lending market, the firm sees continued opportunities in addressing India's credit under-penetration. Digital gold and voice AI are also identified as emerging sectors deserving more attention, alongside consumer AI applications.