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Vrishank
Startups/VC/tech • 1y
This is how the VC ecosystem works. - People from Canada and the USA contribute their money every month to a pension fund with the aim of receiving a pension once they retire - The pension fund, aiming to generate returns, allocates its money to various avenues, including private equity and venture capital. - Since India is an emerging market, they want to take advantage of this situation. These pension funds act as limited partners (LPs) for Indian VC firms, investing significant amounts of money ranging from $5 million to $100 million. - Indian VC firms then invest this capital in various Indian startups, hoping to generate some returns. - When Indian startups generate returns, they return the money to the VCs. - These VC firms then take their cut and return the profits to the pension fund manager. - The fund manager then takes their cut, and the money is distributed among the subscribers of the pension fund as planned.
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