IVCA

Welcome to our ‘Fund in Focus’ series where we profile our member VC funds, underscore their investment philosophy, and highlight some of their interesting work. In this exclusive chat with Badri Pillapakkam, Managing Partner, Prana Ventures. In this edition of Fund in Focus, we spotlight Prana Ventures, a purpose-driven VC firm founded by the team behind Omidyar Network India. In this feature, he explains how Prana blends financial discipline with deep impact, focusing on sectors like climate, MSMEs, and financial inclusion. With a sharp thesis around India’s Aspirers and Seekers, Prana is building a portfolio that’s rooted in tech-for-equity and capital efficiency—redefining what it means to back startups in Bharat.

1. The name 'Prana' signifies life force—how does that align with your investment ethos?

Just as Prana is the vital energy or life force behind existence, we see our financial and human capital as the energy/driving force behind impact innovation, with the entrepreneurs being the ones creating the impact. Prana is about balancing spiritual, emotional, mental and physical health- similarly, we seek to bring harmony to our companies' financial, operational, governance and impact goals.

2. What inspired the founding team to launch Prana Venture, especially at a time of flux in the Indian VC ecosystem?

We believe this is the best time to be an Indian VC. Prolonged 'winter' has meant valuations are more realistic and companies are more capital efficient. Exits through M&A and IPOs have become tangible.

The founding team of Prana Ventures is keen to continue a journey we pioneered at Omidyar Network India (ONI), where we proved that financial and impact returns can co-exist without compromise. We believe the Indian start-up ecosystem is best positioned to solve some of our country's deepest problems and a tech-for-impact VC fund like Prana Ventures can help catalyse these solutions, while generating significant financial returns for stakeholders.

The current flux is not very different from what the Indian PE industry went through in 2010-11, with relevant learnings that can be applied. We are optimistic that India VC will similarly emerge stronger, with good corporate governance norms.

3. With dry powder at record highs and several new funds being raised, what sets Prana Venture apart?

We are unique from other VC funds because of our focus on a few impactful sectors and our deep understanding of the Aspirers and Seekers target audience (i.e. <Rs. 15L annual household income) developed from customised third party research and numerous field visits over 15 years. Relative to other impact investors, we are more tech-focused and sectorally diversified. We are a very DPI-focused investor, having returned >1x on aggregate capital of ~$150M that the founding team has managed, with an additional 2x in remaining value. We keep fund sizes small to ensure we meet the threshold returns on every fund vehicle.

4. What do you think LPs are looking for in emerging VC firms today—and how are you approaching them?

India-focused LPs have significant options to choose from today and based on our experience, they are looking for:

An investment strategy that is well-defined and differentiated

Credible track record of the GPs following the same strategy

An established team that has worked together and is ready to deploy/manage capital

Right to win 'hot' deals vs. top VCs

Anchor LP to provide gravitas to the fund ideology

Complementarity to their existing fund portfolios

Prana Ventures checks the box on all the points above and because we have an existing portfolio of high quality companies offering co-investment opportunities to new LPs, we are more similar to a 2nd time fund manager. Our LP reach-outs so far have been all inbound/direct, with a focus on international and domestic institutional investors and family offices.

5. What sectors and themes will be core to Prana's investment thesis—and why?

Each fund vehicle has a set of 3-4 focus sectors that are identified based on the potential for:

Transformation through technology

Impact - utilitarian, not hedonistic

Steady supply of entrepreneurs innovating in the space

Accordingly, Prana's Fund I will primarily invest in Financial Services, Climate, MSME and opportunistically in Education, Healthcare and Agriculture. Climate & MSME have become very relevant sectors post-Covid and India has a big role to play in innovating for these spaces, with potential for global impact. The opportunistic sectors are ones that we have a deep understanding of, having invested in a successful portfolio over the years, but see that VCs are not active in/have 'abandoned'.

6. As per a media report, you mentioned a focus on the "bottom 60% of India's income pyramid." What kind of business models or startups fit this vision?

Prana's investment strategy targets the Aspirers (top layer of the bottom 60%) and the Seekers (60th-90th percentile of income pyramid). Business models targeting the Aspirers and Seekers have a few noteworthy aspects:

Are designed for high volume, low ARPU and technology has a key role to play here

Are built on 'frugal innovation', i.e. low cost-to-serve to maintain positive unit economics

Leverage low-cost acquisition channels (e.g. influencers, existing offline points-of-presence)

Tap into alternate streams of revenues (e.g. advertising, tipping)

8. How do you maintain continuity for founders while also establishing a new brand identity?

A brand identity is a manifestation of the people, values and culture behind it. As most of us have worked together at ONI for 7-10 years, continuity is relatively easy as our founders have already experienced. Having a similar strategy helps with continuity and ease of understanding for the outside world. We have, however, incorporated learnings and market feedback from our 15 years of investing in India to refine our investment strategy, stage of investing and ways of working as we look to establish a new brand identity. We are very early in this journey and will evolve our brand identity along the way.

9. How do you see the role of impact-driven VC evolving in India's next decade of growth?

With climate change, rise of artificial intelligence (and its impact on unemployment) and further skewing of income (top 10% generating 57%) and wealth (top 10% owning 65%) distribution in the country, particularly in the last 5 years, the role of impact VCs has become more relevant than before. India has to be very thoughtful about more equitable growth in the next decade and as impact VCs, we will look to create access and opportunity for lower income population through technology, while also reducing the harms caused by rapid growth.

10. What kind of founder DNA are you most excited to back?

At Prana Ventures, we look to partner with mission-driven entrepreneurs who are:

Highly passionate about solving deep problems that they have experienced first hand

Nimble and open to feedback, while staying true to their principles/beliefs

Believers in our 'sustainable growth' mantra, with impetus on capital efficiency

Transparent and maintain high corporate governance standards

Tenacious through market ups and downs

Fund In Focus: The Fortune in the Middle - Why Prana Ventures Is Investing in India’s Rising 60%

Spokesperson: Badri Pillapakkam, Managing Partner,Prana Ventures