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Zerodha's arm Rainmatter Capital Commits Rs 1,000 Crore to Indian Startups

Investing in Dreams, Rainmatter's Rs 1,000 Crore Injection Ignites Startup Revolution

11 August 2023


Kunal Tyagi

India produced 3X more unicorns than China in 2022.png
  • Rainmatter Capital, Zerodha's investment and philanthropy arm, commits to investing Rs 1,000 crore in Indian startups, focusing on long-term sustainability.

  • With Rs 400 crore already invested in 80 startups since 2016, Rainmatter emphasizes patient capital for sound business growth.

  • Rainmatter's "perennial structure" approach, void of exit mandates, supports entrepreneurs in building robust and sustainable ventures, aligning with India's unique growth timeline.

In a significant move for the Indian startup ecosystem, Rainmatter Capital, the investment and philanthropy arm of Zerodha, has announced a remarkable commitment to fund Indian startups with a fresh injection of Rs 1,000 crore. This announcement comes from Rainmatter CEO Nithin Kamath, who highlighted the importance of patient investment in the journey of building sustainable businesses in the Indian context.

Since its inception in 2016, Rainmatter has already invested approximately Rs 400 crore into 80 startups, making its mark as a supporter of budding entrepreneurs across diverse sectors. Kamath emphasized that the core principle driving their investment strategy is the belief that sound businesses require time to mature. He stressed the significance of backing Indian founders with patient capital, particularly in an environment where resilience and long-term sustainability hold the key to success.

The concept of "patient capital," where investors remain committed to supporting startups without immediate exit expectations, has gained prominence through Rainmatter's approach. Kamath's own success story with Zerodha illustrates the power of this approach. He explained that Zerodha's steady growth trajectory over a span of nearly a decade led to their eventual breakthrough. This narrative underscores the principle that a startup's endurance and gradual development significantly enhance its chances of success.

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The new capital infusion, characterized as a "perennial structure" without exit mandates, reflects Rainmatter's steadfast dedication to nurturing businesses for the long haul. This unique approach allows entrepreneurs to focus on building robust, sustainable ventures, as they can benefit from investors willing to remain engaged throughout the challenging growth phases.

Kamath also shared that all profits generated from these investments would be reinvested into the fund to support more startups, creating a cycle of continuous support for the Indian startup ecosystem. The commitment of Rainmatter to stay invested indefinitely aligns with the extended timelines often required for Indian startups to achieve sustainable growth, as compared to more developed markets.

Rainmatter's portfolio of supported startups is diverse, ranging from fintech pioneers like CRED and smallcase to health and wellness disruptors such as Pee Safe. The fund's expansion into sectors like healthtech, edtech, and climate tech demonstrates their responsiveness to emerging trends and challenges.

Rainmatter's announcement coincides with a broader trend of investment firms accumulating resources to fuel the Indian startup landscape despite challenging market conditions. With over 40 funds earmarked for startups this year, totaling more than $3.6 billion, the Indian entrepreneurial ecosystem is poised for continued growth and innovation.

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