India VC firm Sparrow Capital closes $56.5M early-stage fund to lead larger rounds

Bengaluru-based Sparrow Capital has closed its third fund at Rs 475 crore (around $56.5 million), giving the early-stage venture firm more capacity to lead rounds and write larger cheques.

The new vehicle will back 25–30 startups over the next three years, with planned cheque sizes of $1–2 million. Sparrow has already made five commitments from the fund.

The raise also marks a shift in Sparrow’s LP base. Around 60% of commitments now come from global endowments, foundations and funds of funds, a move away from the largely non-institutional capital that backed its earlier vehicles.

The firm’s previous Rs 120 crore Fund II supported 27 companies with smaller tickets of $300,000–$500,000. With Fund III, Sparrow plans to reserve 30–40% of capital for follow-on investments in its portfolio.

Founded in 2020, Sparrow Capital has built a portfolio of more than 40 companies, including Gokwik, Apnamart and Deconstruct. The new fund is intended to deepen the firm’s role as a lead investor in India’s early-stage ecosystem.