Team Startupcity

• Sparrow Capital is set to raise Rs 400 crore for its third fund to scale up early-stage investments.
• Founded in 2020, the Bengaluru-based VC firm has already backed over 30 startups, including GoKwik and 91Trucks.
• The fundraise reflects renewed momentum in India’s VC landscape after a slow 2024, with multiple firms announcing fresh capital.

In a sign of resurging investor confidence in India’s startup ecosystem, Sparrow Capital, an early-stage sector-agnostic venture capital firm, is preparing to raise Rs 400 crore (approximately $50 million) for its third fund. Sources indicate that the fundraising efforts are in advanced stages and expected to be finalized in the coming months.

Founded in 2020 by former Kalaari Capital executives Darshit Vora and Yash Jain, along with Aakash Goyal from Fundamentum Partnership, Sparrow Capital has steadily scaled its operations. The firm started modestly with a Rs 4 crore fund focused on angel investing but later expanded its ambitions with a Rs 150 crore second fund. With over 30 portfolio companies to date including notable startups like Aukera, 91Trucks, GoKwik, and Gushwork — Sparrow Capital has built a strong track record in identifying promising early-stage ventures.

The third fund will mark a significant step forward in the firm's growth trajectory. It is expected to enable the Bengaluru-based VC to make larger investments, increasing average cheque sizes from the current Rs 2-5 crore range. The firm aims to become more competitive in the increasingly dynamic early-stage funding landscape in India.

Sparrow Capital’s latest move coincides with a broader wave of fundraising activity among India-focused VC firms. After a subdued 2024 — which saw venture capital fundraising dip to a five-year low — 2025 has ushered in renewed momentum, buoyed by optimism over a robust startup IPO pipeline and improving funding conditions.

Several early-stage and growth-stage VC firms have recently announced fresh capital raises. IndiGo Ventures marked the first close of its maiden fund at Rs 450 crore (around $54 million), while All In Capital announced the first close of its second fund, aiming for Rs 200 crore (about $24 million). Finvolve Ventures has also revealed plans for a similar-sized fund.

Larger investment firms have joined the trend as well. Fireside Ventures is reportedly raising $230 million for its fourth fund. Global VC major Accel raised a record $650 million (around Rs 5,500 crore) for its eighth India-focused fund earlier this year. Bessemer Venture Partners also launched its second India fund with a $350 million corpus, marking a more than 50 percent increase over its first.

Domestic early-stage players are not far behind. Cornerstone VC and Prime Venture Partners have secured $200 million and $100 million, respectively, while smaller firms like Eximius Ventures and SamVed VC have closed funds in the $30-50 million range.

Sparrow Capital’s ambitious third fund underscores a revitalized VC ecosystem in India, positioning the firm to tap into a promising new wave of high-potential startups amid an increasingly favorable investment climate.