What’s Driving Startup Investors’ Shift Towards Domestic LPs?
by Anjali Jain · Inc42SUMMARY
- For fund managers navigating an uncertain fundraising environment, a stronger base of Indian LPs is emerging as a key buffer against global disruptions
- Much of the current jump in Indian LP participation is rooted in the desire of family offices and HNIs to diversify their investment portfolios beyond the stock market and real estate
- However, the biggest catalyst has been the government’s push to unlock capital flows into private markets, beginning with SEBI’s introduction of the AIF Regulations in 2012
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Amid an increasingly volatile macroeconomic situation and geopolitical uncertainty, Indian venture investors are leaning towards domestic capital as against the traditional foreign limited partners (LPs).
According to Inc42’s ‘Indian Investor Ranking & Sentiment Survey’ (Q1 2026), about 74% of over 70 institutional investors said that they would prefer Indian-origin LPs in the next funding cycle.