India’s startup ecosystem is attracting growing interest from family offices, which are increasingly looking beyond traditional public market investments to participate in early-stage businesses. For these investors, the appeal lies not only in financial returns but also in the opportunity to support founders with their networks, experience and long-term capital.

Benaifer Malandkar, Chief Investment Officer at RAAY-Patni Family Office, began exploring startup investments in 2013, when they were still at a relatively early stage in India. In a conversation with Indian Startup Times, she discussed how family offices evaluate startups, the importance of founder conviction, the challenges of valuation and why domestic capital is becoming increasingly important to India’s venture capital ecosystem.

Her perspective highlights an approach that prioritises the quality of an individual business, its ability to evolve and the strength of the founder behind it.

Why Family Offices Are Attracted to Startup Investing

Benaifer said RAAY began investing in startups in 2013 as an addition to a portfolio that was primarily focused on public markets.

At the time, she saw a gap between what early-stage founders needed and what established family offices could offer. Family offices had access to networks and relationships that could help young businesses, while founders brought energy, passion and new ideas.

This combination made early-stage investing an opportunity to support emerging businesses beyond simply providing capital.

Benaifer also distinguishes the approach of family offices from that of traditional venture capital funds. While VCs often build portfolios with allocations across sectors such as fintech ,deep tech and consumer businesses, her approach is more focused on evaluating individual opportunities.

“We as a family office, don’t look at it as a portfolio approach,” she explained, describing the process as a bottom-up assessment of whether a sector or idea has a sufficiently strong moat to sustain its position over time.

Founder Conviction Comes Before Predicting Returns

Evaluating an early-stage startup can be difficult because financial histories are limited and business models may still be evolving. Benaifer said her first consideration is whether she believes in the founder and the passion and vision behind the business.

The next step is to assess whether the idea addresses a meaningful opportunity and has the potential to reach a wider audience
For her, predicting returns is particularly difficult at the earliest stages of a business. Rather than making financial projections the primary consideration, the initial focus is on the founder and the underlying idea.

Clarity of thought is another important factor. Benaifer looks for founders who have thought through their ideas carefully and can explain what they want to build. This gives investors greater conviction in their ability to execute.

She also believes a startup’s ability to sustain itself cannot be determined entirely at the beginning. Businesses evolve as market conditions, regulations and broader economic circumstances change.

A company may start with one idea, adapt its model over time and eventually develop into something different. Changes in the macroeconomic environment or regulatory requirements can also influence how a business operates.

For Benaifer, the ability to navigate these changes is an important part of building a sustainable company. A startup must be able to adapt as circumstances evolve rather than rely entirely on its original business plan.

Valuation Depends on Market Conditions and Business Potential

Startup valuation remains a subject of debate among investors, according to Benaifer. She highlighted two important factors: the valuation frameworks adopted from developed markets and the demand and supply of capital.

Valuation metrics used in markets such as the United States may not always translate directly to Indian businesses. At the same time, investor interest in particular sectors can influence the premiums startups command.

Deep tech, for example, has attracted significant attention, while other themes have experienced periods of heightened interest in the past.

However, Benaifer believes valuation should also be assessed against what a company could potentially be worth in the public markets over time.

She noted that there is no consistent rationale for why some businesses receive substantially higher revenue multiples than others. Sector sentiment and demand for capital can influence pricing, making it important for investors to look beyond the immediate excitement surrounding a category.

For family offices, understanding the business and its potential over time remains central to evaluating whether an investment opportunity makes sense.

Market Size and Founder Relationships Matter During Due Diligence

Beyond the founder and the business idea, Benaifer places importance on understanding the total addressable market (TAM) of a startup.

She said the investment team assesses whether a business can serve a sufficiently large audience or whether its potential customer base is too restricted. A company with limited opportunities to expand its reach may face constraints on future growth.

The objective is to identify businesses with enough market breadth to expand their offerings and deepen their presence over time.

Benaifer also highlighted founder relationships as a consideration in her investment decisions. She said the family office is cautious about businesses led by husband-and-wife founders or other closely related co-founders, as it is uncomfortable with personal relationships becoming intertwined with business decisions.

These considerations form part of the broader assessment of whether a startup has the potential to develop into a sustainable business.

What Makes a Startup Worth Additional Investment?

For existing portfolio companies, Benaifer identified the entry of a marquee investor as one signal that may encourage the family office to participate in subsequent funding rounds.

When a recognised venture capital investor joins a company’s cap table, it can indicate that the business has undergone additional scrutiny. Benaifer said this can provide greater confidence when considering whether to increase an existing investment.

She also highlighted the importance of reviewing a company’s financial performance, particularly its annual burn rate.

Family offices and other minority investors may have limited involvement in board-level decisions and may not receive frequent updates from startups. Annual general meetings can provide an opportunity to interact with founders and review the company’s performance.

Assessing how much capital a startup has consumed in relation to the progress it has made can help investors determine whether its spending is justified.

Together, the entry of experienced investors and a closer look at financial performance can help make informed decisions about whether a portfolio company merits additional capital.

Exit Planning Begins With Mapping Possible Outcomes

Benaifer said exit planning is part of the investment evaluation process at RAAY Before committing capital, the team discusses the possible exit routes available to a business.

The process involves identifying three or four potential paths, assessing the most likely option and considering alternatives. This creates a roadmap for how the company could eventually provide returns to its investors.

The family office also evaluates whether the founder consistently delivers against the plan, both quarter on quarter and year on year.

For Benaifer, identifying possible exit routes is not enough on its own. Investors must also monitor whether the company is progressing in a way that supports the expected outcome.

AI Investing Requires Expertise and Due Diligence

As artificial intelligence attracts more attention, Benaifer cautioned investors against entering startup investing without the expertise or resources to assess opportunities properly.

She explained that the family office conducts its own due diligence on companies that approach it directly. However, she acknowledged that individual investors may not have the resources needed to examine a startup’s underlying technology and business model in sufficient depth.

Her recommendation is that investors who want exposure to startups but lack the relevant expertise consider investing through experienced venture capital funds.

She compared these funds to mutual funds for startups, as they can evaluate opportunities, conduct due diligence and build a portfolio on behalf of investors.

The broader message is that participation in startup investing should be accompanied by an understanding of the risks involved and the ability to evaluate the businesses receiving capital.

Indian Capital Is Playing a Growing Role in Venture Funding

Looking ahead, Benaifer expects family participation in startup funding to continue expanding. She said the momentum behind families investing in businesses has strengthened over the past five years compared with the preceding years of her experience.

She also pointed to a shift in the sources of capital available to Indian venture capital funds.

Traditionally, many funds relied on foreign institutional investors and capital from developed markets. However, Benaifer has observed more Indian wealth owners funding domestic venture capital funds over the past two years.

This reflects a growing interest among Indian investors in participating directly in the country’s economic growth through their own investment portfolios.

As domestic capital becomes more prominent, family offices could play a larger role in supporting both venture funds and startups.

For Benaifer, the evolution of family office investing in Venture funds is part of a wider change in India’s venture capital ecosystem. A combination of founder-led innovation, careful investment evaluation and increasing participation from domestic wealth owners could shape how capital reaches the next generation of Indian businesses.

 -By Aakriti Jaiswal