L to R: Anant Vidur Puri – Partner, Vishal Gupta – Partner, Nithin Kaimal – COO
Image: Hemant Mishra for Forbes India
When Vishal Gupta started out at Bessemer Venture Partners, in India, venture capital in the country was more “private-equity style,” he recalls. That was 2006, when he was one of three people kicking off the VC firm’s India operations out of two connected rooms in Mumbai’s Trident hotel, helped by a formidable secretary, he recalls.
In fact, Bessemer’s investment in Motilal Oswal Financial Services (MOFS) that year, for example, alongside a US-based firm called New Vernon, was described in the top Indian business dailies as a private equity deal. The well-documented news shows Bessemer picked up 2.6 percent in the capital-markets brokerage at Rs208 a share, privately valuing MOFS at Rs,250 crore.
A year later, MOFS went public at Rs825 a share, closing at Rs977.45 on listing day, bringing a handsome return to Bessemer, which exited partially and then fully by 2010.
Today, Gupta and his colleagues continue to back companies bringing innovation to the Indian market. But the approach of the early years–backing more mature, and non-tech, companies such as Shriram EPC, Orient Green Power or Sarovar Hotels & Resorts–have given way to true blue early-stage startup investments in tech-led businesses, with Bessemer often going in early and sticking with the founders for several years.
Perfios Software Solutions, for example, is widely seen today as a promising fintech innovator. Bessemer, the startup’s first institutional investor, led its $6.2 million Series-A investment in March 2017, according to data from Tracxn, a private markets intelligence provider. Privately last valued at $2.6 billion after a March 2024 funding round, Perfios is expected to seek a public listing soon in India.
Gupta had started looking at tech-led startups from around 2011, and by 2013, he moved the firm’s India base to Bengaluru. Some early tech-led bets Bessemer made include Anunta, Indian Energy Exchange, Snapdeal, Remedinet, Taxiforsure, and Matrimony.com, StartupCentral noted in a report in 2014.
Bessemer also backed other tech-led consumer businesses in India spanning both early and growth stages, including LivSpace (2014, series A), BigBasket (2015, series C), Urban Company (2015, series B), PharmEasy (2015, series A) and Swiggy (2016, series D). More than 80 percent of Bessemer’s investments in India over the last five years have been in early-stage companies, the firm said in a March 12 press release announcing its second dedicated India fund, a $350 million corpus.
Roadmap
The partners at Bessemer invest in companies based on what they call roadmaps, in which they lay out their arguments and expectations that a certain sector will see big changes or shifts, or certain type of companies will do exceptionally well in the years ahead.
“We look for discontinuities in the ecosystem,” Gupta says. “Changing of revenue pools, shifting of profit pools, regulatory changes may be driving something, new platforms emerging and new consumer behaviour changing.”
The idea is to ferret out these discontinuities and try to go deeper and see what the future might look like over the next 10-15 years in an ecosystem. The investment plan is to be a bit ahead of the curve. For example, Bessemer developed a consumer internet roadmap around 2011, and its investments in Livspace, Bigbasket, Urban Company, PharmEasy, and Swiggy–using its global funds–can be attributed to that roadmap.
With the latest India fund, Bessemer will focus on early-stage investments in areas including AI-enabled services and software-as-a-service (SaaS), fintech, digital health, direct-to-consumer brands, and cybersecurity, the firm said in the press release.
These remain consistent with most of the focus areas the firm outlined in November 2021, with its first dedicated India fund, which was $220 million. The mandate for the second fund reflects how the Indian market has evolved.
“There are not many large categories left if you think about them from a scale perspective,” Gupta says. For example, dominant players have already emerged and are entrenched in certain broad categories such as horizontal ecommerce (meaning covering a very wide variety of products.) But the market is ready for the next phase of innovation in multiple sectors.
Beyond fintech, where Gupta is expecting the next big phase of growth in India, “I would say, two roadmaps that we probably are most excited about today, one is around direct-to-consumer, and second, cybersecurity,” he says. The reason for the first is that in ecommerce, “the next wave that we see now is the changing of consumer behaviour to direct-to-consumer brands.”
Bessemer is betting that the Gen-Z consumer–born with a smartphone in hand with some of the world’s cheapest data rates–definitely doesn’t want to buy her parents’ brands. While the Indian customer remains value conscious, it is a far more affluent India than 10-20 years ago, and access to consumption and spending is easier, Gupta points out.
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Brands are emerging tapping this opportunity that are both premium and ‘mass premium,’ and corresponding market sizes ranging from niche segments to some that are large enough for ventures to build hundreds of millions of dollars of revenue, he says.
For example, Bessemer recently invested in a startup bringing together sports equipment, fitness gear and clothing to build something akin to an online Decathlon (the French sports gear retailer whose large retail stores are popular in urban India as well).
The opportunity in cybersecurity is perhaps a bit more obvious. India is now a far more connected digital ecosystem than even five years ago, Gupta points out. And with the rise of AI, cybercrime will likely hit a different plane. Researchers are already demonstrating that cyberattacks by AI agents will be here soon.
Cybersecurity spend in India alone is close to $6 billion, Anant Vidur Puri, Gupta’s colleague, and also a partner in India, points out. It’s growing in double digits.
India is also the second-largest base of cybersecurity professionals in the world. Some of the world’s top cybersecurity software vendors, including Palo Alto Networks, CrowdStrike, and SentinelOne have all established bases in India, and some of these bases are their biggest centres outside the US, Puri notes.
This, like other areas of software and hi-tech, where the India-based global centres of big tech companies have fostered the local talent base, is growing the cybersecurity ecosystem also.
Puri led Bessemer’s Software-as-a-Service India roadmap in 2023 and one on the rise of cloud-based AI in India, last year. The projection in these roadmaps is that India-based cloud software businesses, including both foreign companies and the SaaS startups from the country, will grow more than 3X from current levels to hit $50 billion in revenue by 2030, with the rise of AI providing a potential upside.
“AI is accelerating the adoption of software, increasing the value of what software can deliver and the scope of what software can do,” Puri says.
He expects that by 2030 there will be more than a few Indian cloud software companies, each with $100 million in annual recurring revenue. And if AI is the next wave of building software, Indian software companies will be in the thick of it, he says. For example, India is the largest contributor to open source AI projects on GitHub, the most popular web platform for software developers to share code and collaborate.
“If you think that software is eating the world and AI is eating software, there is no way you are going to be able to ignore India as the market with the largest number of developers,” he says.
Venture funding has started coming back into software, and the potential for AI-led solutions is an important factor in that, he points out. The reason the $100 million revenue mark is significant is that the milestone shows that such companies have achieved a certain level of “product-market fit, customer love and the right to scale,” he says.
And successful software companies, in general, benefit from the power of compounding, he says, meaning if the software product or platform becomes highly relevant to customers, the venture can continue to grow at a fast clip and quickly compound its revenue to become a much larger business.
The revenue milestone can also be significant in one other important way in the context of the VC ecosystem in India. While $100 million in ARR is not particularly noteworthy in the US – where there are a large number of such companies – such a company with Ebitda margin of say 20 percent or more would be a “very attractive” prospect for listing in the Indian stock exchanges, Puri says.
Fintech Software
“We continue to be very keen on the fintech ecosystem in India because we think that will continue to be very large,” Gupta says. And by fintech, he means software mostly, including software for banks, insurance companies, asset management companies, brokerages and so on.
Consider India’s unified payments interface (UPI) for example, which people often see as a simple peer-to-peer transaction. However, before the transaction goes through, the data needs to bounce off some multiple nodes (from the sender’s bank via the UPI system to the receiver’s bank), Gupta points out.
“If there’s a failure at any one node, how’re you going to observe that … or how will you prevent AI from spoofing your KYC,” and so on – there is a multitude of such layers and areas in which modern software is the need of the hour.
With their legacy software, today’s large banks and financial institutions in India have many siloes, he says. A simple example, a credit card IT system may not be talking to the banking system with respect to the same customer of the same bank. “Where’s the interoperability between all these different ecosystems?”
Similarly, “I’m very excited about the health insurance ecosystem in India and where it is going. It’s a secular multi-decade build, if you think about it,” he says. As India goes from a $10-12 billion-in-premium health insurance market today to $50 billion or more, how does one underwrite a given individual.
Or how does an insurer pre-empt a likely problem a customer might face on the basis of longitudinal data (meaning data collected on the same subject over a period of time).
Whether it is fraud prevention or protecting customers or settling claims, obtaining this ‘one customer’ view can be a game changer for financial companies. Software entrepreneurs who can build solutions for such requirements will end up establishing large businesses, Gupta points out.
Also read: Why the “venture mindset” is not just for tech investors
Resurgent Landscape
India’s venture capital (VC) landscape demonstrated resilience and recovery in 2024, with funding rebounding to $13.7 billion — 1.4x the 2023 levels, Bain and Company said in its India Venture Capital Report 2025 on March 10. Strong domestic fundamentals, progressive regulatory reforms, and rising public market activity strengthened India’s position as Asia-Pacific’s second-largest VC destination, according to the report.
A rise in deal volumes (880 deals in 2023 versus 1,270 in 2024, a 45 percent increase) led this growth in deal activity. Small and medium-ticket deals (less than $50 million in value), which made up around 95 percent of the deals, increased by about 1.4x while large deals (more than $50 million in value) nearly doubled, returning to pre-pandemic levels.
Tech-first sectors (consumer tech, software and SaaS, and fintech) remained dominant, capturing more than 60% of the total funding. Consumer tech became the largest sector, with funding rising 2.3x to $5.4 billion. Exit activity remained steady in 2024, edging up to $6.8 billion.
“The Indian startup base has tripled since 2021, and tech continues to be a dominant theme in India,” Aditya Shukla, a partner with the consultancy, in Mumbai, tells Forbes India in an interview. “What has changed is that you are seeing a lot more innovation in consumer tech, software and SaaS, which will remain a core part of VC growth equity investments in India,” Shukla says, who is a member of Bain’s private equity and technology practice.
He agrees that new, niche opportunities are on the rise in e-commerce and that quick commerce is expanding the market in its own right. With software and SaaS, factors such as improved utility of the solutions coming out now, increasing levels of embedded AI and the maturity of the ecosystem with respect to ‘go-to-market’ in the US are all some structural, fundamental tailwinds, he says.
The first set of software companies that have achieved scale, Zoho and Freshworks – but also tech-led giants such as Flipkart – has spawned a large number of entrepreneurs. Access to mentorship, networks, playbooks and money has all matured and this is creating a virtuous cycle, he says.
With respect to founders’ mindset today, there is a clear shift towards balancing growth with a path to profitability. And there’s a very visible incentive for this, he says. The mega deals in 2024 are evidence that VCs clearly prefer companies that have focused on both top line growth and bottom line improvements.
“It’s a welcome shift,” he says.
Another noteworthy trend is that more Indian startups than ever, are now coming from outside Bengaluru, Delhi-NCR or Mumbai, he says. Hyderabad is on the rise as a strong startup hub and smaller centres such as Jaipur are also emerging. Today close to one in four new startups, the “VC-friendly” ones, are coming from outside the three biggest centres, Shukla says.
Global Network
Bessemer, headquartered in San Francisco, is one of the oldest VC firms in the world. Henry Phipps Jr, co-founder of Carnegie Steel along with Andrew Carnegie, sold his stake in the steel company to JP Morgan’s US Steel in 1901 for $40-50 million (about $1.9 billion today) to become one of the world’s most wealthy individuals at the time.
He established a family office trust, Bessemer Trust, in 1907, that has expanded to become a 3000-plus multi-office private money manager, according to its website. In 1911, he spun out Bessemer Securities, initially to manage the money from the sale of the steel company stake and the firm did deals in venture capital, private equity and public securities and real estate.
Phipps was inspired by the process of ‘bessemerisation’ or the Bessemer Process, invented in 1856 by Henry Bessemer, a British inventor. The process involved blowing air through molten pig iron to remove impurities. It helped make steel production more efficient and effective and in that way played a role in heralding the first industrial revolution.
The venture capital business of Bessemer Securities eventually evolved into what is today Bessemer Venture Partners, raising its own first fund including external investors in 2007. By 2024, it had become one of the three biggest VC firms in the world. Today it has partners and investments in Tel Aviv, Silicon Valley, San Francisco, New York, London, Hong Kong, Boston, and Bengaluru.
Worldwide, Bessemer has $18 billion in assets under management. It has seen more than 145 IPOs and 300 portfolio companies in sectors including enterprise, consumer and healthcare. Its global portfolio included ServiceTitan, Pinterest, Shopify, Twilio, Yelp, LinkedIn, PagerDuty, DocuSign, Wix, Fiverr, and Toast.
Bessemer is also widely credited for coming up with the term ‘anti-portfolio’ to talk about big missed opportunities, and keep its partners grounded. Its own anti-portfolio famously includes Apple, Google, Facebook, Intel and Tesla.
In India, “one thing that stands out to me about them is that they’ve had a measured pace of investments and they’ve been among the most consistent players” since 2005-06, Arun Natarajan, founder and CEO of Venture Intelligence, tells Forbes India in an interview.
“And Vishal himself is another pillar of that consistency, I would say,” Arun adds. “He’s been there pretty much from the beginning and seen all the different changes from those later-stage non-tech investments (of 2005-06) to today’s early-stage tech startup investments. He’s probably been instrumental in making some of those changes as well.”
A few months before announcing the new fund, Gupta would not be drawn into talking about whether it was time for it, in an interview with Forbes India. Instead, he wanted to focus on the idea that for the right founder and startup, money will always be available at the firm.
The firm can go from a $1 million cheque to a $50 million cheque, depending on a company’s need, he says. Bessemer is able to scale its investments with the scale of the portfolio venture, and can “remain invested for several, several years, offering patient capital,” he says.
With its presence in all the major startup hubs around the globe, the firm can also activate those networks – and the corresponding access to money as needed – for founders and startups looking to go global with their businesses, he says. “Capital is not a constraint for Bessemer.”