Dear Readers,
Investor Charlie Munger once said, “Show me the incentive and I will show you the outcome.”
Do you like coffee from Blue Tokai? Are you carrying a stylish Mokobara bag? Do you order from Licious? There is one common factor across these brands, including more familiar names like Myntra, Akasa Air, Udaan and Udemy. They have all been fuelled by family office capital. But after the funding winter, market volatility, mismatches between public and private markets, and a high-volume but low-growth IPO market, family offices too have shifted their mindset.
After communicating with family offices for years, I now feel the era of FOMO capital is fading away. Indian family offices are no longer signing cheques for growth alone, but are betting on founders’ discipline in the new-age economy.
Shifting mindset of family offices
At the ET Entrepreneur Summit in Mumbai this week, I met dozens of family offices, LPs and other ecosystem players. What started as a small desk within large corporate offices to invest family funds has now scaled up and matured rapidly. I can clearly see a paradigm shift in India’s family office landscape. India has around 400-450 family offices, many of which invest in early-stage startups. Some prefer to stay invested until IPO, while others look for exits as startups scale and seek growth capital.
What stood out in my conversations was how investors have added new layers to evaluating founders and entrepreneurs. They are betting on frugality and the strength of unit economics, not just hypergrowth or overambitious plans. The shift in mindset is visible.
Deepak Padaki of Catamaran said, “If unit economics are ignored early, fixing them later becomes nearly impossible.”
Anirudh Damani of Artha India Ventures added, “If you lose on every transaction, scale doesn’t save you. It only accelerates the problem.”
Nirali Solani of Choa told me, “I have met many founders who were rejected by hundreds of VCs and later proved their mettle when we invested.”
From what I gathered, founders are no longer rewarded for chasing vanity metrics but for their behaviour and discipline.
I also sensed that family offices are increasingly engaging with regulators and policymakers to reduce uncertainty. Several investors told me that while they can take risks on business models, policy uncertainty at the time of exit, say after five years, becomes a real challenge. The recent case involving Tiger Global has disrupted several investments.
What has also changed, quite sharply, is the return expectation and investment strategy of family offices. Private market investing was earlier associated with high return expectations, often in the range of 20-25% IRRs, with venture-style bets targeting 3x to 5x or higher outcomes over a few years. While those benchmarks remain relevant, conversations now suggest a more calibrated approach.
There is a growing emphasis on capital preservation, visibility on cash flows and clearer pathways to profitability. Instead of backing scale at any cost, many family offices are structuring investments more carefully, linking follow-on capital to performance milestones and seeking better downside protection.
I also notice a preference for co-investing alongside established institutional investors, along with a sharper focus on governance, board visibility and exit clarity. In simple terms, capital is no longer just patient, it is becoming more disciplined and selective.
India as a market
From my conversations, it is clear that the deal pipeline is not as robust as it once was, largely because investors have learned their lessons and are signing cheques more judiciously. The FOMO factor has taken a back seat. Investors are asking sharper business questions and closely observing founders’ behaviour, including how they treat employees.
Investors are present and ideas exist, but I believe the match will now happen only when passion and returns truly align.
A bigger challenge I see is evaluating genuine startups when many are using AI and other tech tools. Several appear to be only tech-enabled rather than truly tech-driven.
Looking beyond short-term volatility, I remain convinced that India as a market and investment hub is expanding. It is currently on the favourite list of global investors. I have heard multiple global tycoons and leading innovators say they cannot ignore India, which has supported the growth of the private credit sector. At the same time, the rise and expansion of family offices continues.
Why the rise
In my view, the rise of family offices is structural. Initially, Indian family offices invested in their own businesses or in tangible assets such as gold and real estate. But the landscape has expanded and the digital era has unlocked new layers of opportunity. At the same time, many families are unsure whether their traditional businesses, which generated wealth over decades, can continue to compete in a digital world. That is why almost every family I speak to is now betting on new businesses by investing in startups through family offices.
Wealth preservation remains the core objective for most family offices, even as they pursue wealth creation. At the same time, priorities such as succession planning, governance and compliance are moving to the centre. Many family offices are evolving beyond investment vehicles into structured platforms overseeing long-term wealth management and inter-generational transition. Asset allocation is also shifting, with growth assets taking a larger share of portfolios, alongside diversification into real estate, REITs, InvITs, private equity, private credit and venture capital.
The rise of first-generation, risk-tolerant UHNIs is accelerating this shift, with greater participation in new-age sectors through angel investing and alternative funds. As investment complexity, technology adoption and regulatory requirements increase, I see family offices relying more on professional structures and customised strategies, positioning themselves as integrated hubs for capital allocation, governance and long-term stewardship.
This has led to the emergence of a segment that ranges from single-family to multi-family offices, with investments no longer restricted to specific sectors. Old India Inc. is now backing digital India. What I find particularly interesting is that the next generation does not just want to preserve capital. They want to participate in India’s growth story, especially in the new-age ecosystem. They are not just allocating capital but also actively engaging with startups.
Future of family offices
The idea of family offices backing new businesses and young founders is remarkable. But I strongly believe this should not become just another money-churning exercise where 5x or 10x outcomes are seen as the only benchmark. We have already seen how chasing such outcomes has led to failures and capital erosion. A mindset shift is essential.
While AI and tech-enabled startups are attracting investor interest, I believe family offices should also look at sectors such as research and development and manufacturing to maintain diversification. India’s biggest challenge remains its dependence on imports. If startups can help the country become even marginally more self-reliant, the long-term impact would be far more meaningful than a 2x or 10x return.
Jack Ma once said that the coming decades will see fewer billion- and trillion-dollar companies but many more million-dollar enterprises, driven by the rise of entrepreneurship. From what I see on the ground, India has already begun to exemplify this shift
Please share your feedback, suggestions if any. You can reach me on amol.dethe@timesinternet.in.
As usual, I am adding here the top 5 stories of the week, trust you will find them meaningful.
1.Is India readying for Global Minimum Tax: What MCA’s change in AS 22 means for India Inc
2.Corporate Laws Bill 2026 arms NFRA with sweeping enforcement powers, penalties and curbs court intervention
3.Income Tax Rules 2026: What Changes for India Inc from April
4.Finance Bill 2026 amendments validate past tax actions, widen reassessment powers, tighten timelines
5.NFRA flags independence gaps, audit lapses at EY firm SRBC; firm cites documentation issues, defends processes
Happy Reading
Amol Dethe,
Editor,
ETCFO
(Editor’s note is a column written by Amol Dethe, Editor, ETCFO. Click here to read more of his articles exploring several buzzing topics)
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