Elevation Capital closes $500 million Fund IX, doubles down on AI and India with bigger early

Elevation Capital closes $500 million Fund IX, doubles down on AI and India with bigger early-stage bets

Elevation Capital has raised a $500 million ninth India-focused fund (fund IX), sharpening its focus on early-stage startups at a time when venture capital investors are becoming increasingly selective, while betting that artificial intelligence (AI) will create the next wave of large technology companies from India.

The new vehicle, Elevation Capital Fund IX, comes over four years after the firm's previous $670 million fund (fund VIII). While the latest corpus is smaller from the earlier fund, the venture capital firm says it should be viewed alongside Elevation Holdings, its recently launched $400 million late-stage vehicle, giving it a combined firepower of $900 million across the startup lifecycle.

"We are following a barbell approach," co-managing partner Mukul Arora told Moneycontrol in an interview. "Elevation Capital IX will remain sharply focused on Seed and Series A opportunities, while Elevation Holdings will partner with category leaders well beyond their IPO. Across the two funds, we will be investing from a combined pool of $900 million."

The fundraise comes amid a mixed venture environment. While late-stage funding and IPO timelines have been affected by macroeconomic uncertainty, depreciation of the Indian rupee and cautious public markets, early-stage investing has remained resilient, particularly around AI-native startups.

For Elevation, across the two vehicles, the message is clear: it intends to invest more aggressively.

"We continue to be very active on the early-stage side. The funding environment is fairly vibrant," said partner Mridul Arora, adding that the firm continues to complete around 15-18 investments annually and expects that pace to continue. "We are very aggressive."

While Elevation has typically written $2-5 million cheques for early-stage startups, it has begun investing up to $10 million as competition for quality companies intensifies and funding requirements evolve in the world’s third-largest startup ecosystem.

Unlike previous technology cycles that revolved around internet penetration and smartphones, Elevation believes AI represents a platform shift that can unlock access to expertise across sectors such as healthcare, financial services and education.

"We are all in on India, We’ve said this before but we mean it even more now" Mridul Arora said. "Our investment activity reflects where GDP and value creation in India will happen. AI cuts across all of these sectors, and almost two-thirds of the investments we've made over the last 12-18 months have been AI-native in nature. This will continue to be the case."

Rather than carving out a separate AI allocation from the $500 million corpus, the firm expects AI to become the default layer across startups it backs going forward.

Mukul Arora argued that AI could democratise expertise in the same way mobile internet democratised connectivity.

"For the first time, expertise is getting commoditised," he said. "Can a great doctor serve ten times more patients with AI? Can every Indian have access to better teachers and financial advisors? These are much harder problems, but AI makes them solvable for the first time."

The firm's investment priorities span enterprise AI, AI applications for India, fintech, consumer technology, healthcare, education and emerging deeptech areas such as robotics, defence, advanced manufacturing and space technology.

Elevation also pushed back against the view that India's AI opportunity is limited compared with Silicon Valley. The firm has been building out a presence in the Bay Area, but says the objective is to help Indian founders build globally competitive AI companies rather than invest in US startups.

"We want Indian companies to be on the global map," Mukul Arora said. "If you're a founder in India building for the world, we want to be the platform that helps you compete with the best companies globally," he said in the interview.

"India has created a playbook for the world when it comes to software and building world-class companies and global companies," he added.

Elevation Capital's partners also acknowledged that deep tech is emerging as a key investment theme and said the firm needs to strengthen its capabilities in the space. "Deep tech is one area where we need to strengthen further. And we will be focusing on that going forward. We are seeing very early green shoots," Mridul Arora said.

The latest fund was backed almost entirely by existing limited partners, according to Mukul Arora, who said the raise happened broadly in line with expectations despite foreign investors increasingly scrutinising returns amid rupee depreciation.

Moneycontrol had earlier reported that the rupee's depreciation is eroding dollar-denominated returns for Indian venture capital firms, making it harder for them to justify India allocations to overseas investors.

"Rupee depreciation is, of course, a factor," he said. "We still have to generate returns that meet our LPs' expectations."

Looking ahead, Elevation believes India's next decade will be defined by AI-led entrepreneurship.

"We believe the next decade will be India's golden decade," Mukul Arora said. "It won't be easy, and all of us, including Elevation, will have to step outside our comfort zones. But if we do that, this decade will surprise everyone on the upside."

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