Japan’s MUFG readies $250 million India fund as investor mix shifts in startup funding

Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial group, is setting up a $250 million (about Rs 2,300-2,400 crore) India-focused fund to back early and growth-stage startups, according to people familiar with the matter.

The fund is expected to invest largely in early-stage fintech startups, they said, and the corpus could be increased to $400 million.

It will be led by Mayank Shiromani, deputy chief investment officer at MUFG Innovation Partners.

Queries sent to MUFG remained unanswered till press time.

The development comes at a time when a new crop of large venture funds are taking aggressive early and growth-stage bets on Indian startups, largely making up for the likes of SoftBank and Tiger Global which had been involved in hectic deal-making during 2020-23.

Funds such as MUFG, Susquehanna Asia VC, Enrission India Capital, SMBC Asia Rising Fund and Mirae Asset Global Investments have been sustaining or stepping up activity in India since 2025, even as the fund inflow from the earlier investors has slowed sharply.

The recent investors have backed startups across fintech, consumer internet and digital services, including Jupiter, DMI Finance, Dhan, Olyv, Skydo, AppsForBharat, Safe Security, Atlys, Snabbit, Pronto and Battery Smart.

Global angel investor Lachy Groom has also increased India activity, with two investments in 2026 following one in 2025. His recent bets include Pronto, Even Healthcare and Alt Carbon.

ET reported last month that Groom was discussing investing in drone tech startup Airbound and aviation and aerospace component manufacturing company Alteon.

According to Venture Intelligence, Mirae and MUFG have invested in four deals each since the start of 2025, while Susquehanna has participated in 10 and Enrission in 15 venture deals.

On the other hand, Tiger Global made 55 investments in Indian startups in 2021 and 47 in 2022, but the count fell to six in 2025 and there has been none so far in 2026, Venture Intelligence data showed. SoftBank made 17 investments in Indian startups in 2021 and four in 2022, but none thereafter.

MUFG used its Ganesha Fund, set up in 2022, for investments in Indian fintech startups till now. The $300 million fund was mostly focused on growth-stage deals, and now with the new fund MUFG will get active in early-stage action as well, according to the people cited earlier.

Filling the gap

The shift reflects a changing view of India’s startup sector. Investors deploying now believe valuations have corrected, competition for deals has reduced and India’s digital consumption habits, built over the past decade by companies such as Zomato, Swiggy, PhonePe, Groww, Meesho and Zepto, have become mainstream enough for the next set of startups to scale up with less capital.

This contrasts with the sharp fall in activity at Tiger Global and SoftBank.

“For a US fund today, the opportunity cost is whether they spend time in India or deploy billions of dollars into top 5 AI (artificial intelligence) companies. For deep India investors like us, this is a great opportunity,” Puneet Kumar, CEO of Mirae Asset Venture Investments, told ET.

The funding slowdown has improved deal quality for investors still focused on India, he said, adding, “Right now, because others are not active, we are getting much better deals. That is why we feel this is the right time to double down.”

Over the past three years financial services companies with large balance sheets have also shown an openness to take bets on Indian startups which can play a larger role in the Southeast Asian opportunity as well.

SMBC Asia Rising Fund, for instance, has invested across the entire domain of financial services in India, from Yes Bank and Shivalik Small Finance Bank in the banking sector to M2P and Modifi in the fintech infrastructure segment to consumer lending startup Olyv and trade financing player Vayana.

“We see a significant ‘white space’ across Series B and C (growth) rounds, specifically within functional sectors like fintech and financial services. In these areas, the depth of business is clearly visible, supported by strong technology stacks and valuations that remain more attractive relative to AI or deep-tech sectors,” said Rajeev Ranka, partner, India Investments at SMBC Asia Rising Fund.

The fund has so far invested close to $100 million in Indian fintech startups. These investors are trying to back startups which are building for the tech-savvy and internet native Indian population.

“The last decade wasn’t about category creation; it was habit creation. We are paying to build on behaviour that already exists,” said a growth-stage investor, who did not wish to be identified.

Besides, regulatory changes have opened up fresh opportunities in otherwise tightly managed sectors like fintech—for instance, arrangements like co-lending partnerships.

“Recent guidelines on co-lending, cross-border payments and co-branded cards have acted as a catalyst, providing the necessary framework to move the industry forward in the right direction,” Ranka said.