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What led you to launch Vystra Capital in India, and why did you choose to operate as a two-person team? How did your prior professional experiences shape your decision to focus on acquiring and operating a single company?
India is a country of SMEs, and having spent the better part of our careers working closely with them, at companies like Rivigo and Zetwerk, we’ve seen firsthand how strong the foundations many of these businesses have built. They are operationally sound, cash-generative, and in our view, genuinely ripe for the next phase of growth with the right experience and mindset behind them. That conviction is really what led us to Vystra.
When we came across the search fund model (through a serendipitous encounter), it resonated immediately. It felt like a natural extension of everything we had been doing: working closely with owner-led businesses, leveraging technology to make them more efficient, and identifying new vectors of growth while keeping the core intact. Instead of building from scratch or chasing the next high-growth theme, we found a path that let us apply our experience directly: find a great business, bring in efficiencies and professionalization, and then continue leveraging our growth toolkit to deliver scaled outcomes. For two operators with our background, it was hard to imagine a more fitting vehicle.
The search fund model is still very new in India (the first SF only emerged in 2024, with the first acquisition completed last year). How challenging was it to convince local investors to back your search, and how did you assemble your international cap-table? What were the most common reservations you encountered about the model or your specific venture?
We actually went the other way around compared to most searchers: we prioritized local capital first, and not just for the money. Domestic investors bring significant value beyond capital, including proprietary deal access, support in deal execution, and introductions to industry-level advisors. Both of us have over 13 years of experience across corporates and startups, so our networks were large enough that raising local capital was relatively straightforward.
International was a different story. Being slightly late to the first wave of Indian search funds meant that many early international investors had already committed their India allocations and wanted to see how those investments played out before writing new checks. We had to identify a relatively fresh pool of capital. We were fortunate to be introduced, through warm connections, to INSETA partners, Lighthaven, Ambit Partners, and Kinderhook Partners, and each of those partnerships came together well. We believe we have one of the stronger and well-diversified international cap tables among Indian search funds today.
The most common reservations we encountered were around entry multiples, buyer appetite at the SME level, and whether India had room for more searchers. Two things helped us build comfort: first, we came in having already spoken with potential sellers and other searchers before approaching international investors; and second, having our India capital committed beforehand gave us meaningful credibility. Our openness to manufacturing, which most searchers tend to avoid, also differentiated our thesis and resonated with investors looking for broader deal optionality.
With more than half a dozen SFs launched in the past 12 months, how do you assess the current opportunity set for SFs in India compared to more established markets such as the US or Europe?
We are barely scratching the surface in India. India has a massive SME base, practically no mid-market private equity presence, and very limited exit options for an entire generation of boomer entrepreneurs who are sizeable but not scaled enough for large PEs. Many of them face genuine succession challenges; their children have either chosen different paths or simply aren’t interested in running the family business. That creates a deep, structural opportunity for search funds.
We are deeply excited about the evolution of the landscape. We anticipate domestic capital beginning to back the search model, and we believe that over the next five years, India could see four to five dedicated funds-of-search-funds emerge to support Indian searchers. That kind of institutional infrastructure would be a step-change moment for the ecosystem here, and would put India on a trajectory to become one of the more active search fund markets globally.
What structural characteristics of the Indian SME landscape make it particularly attractive—or challenging—for SF investing?
On the attractive side, India offers remarkable diversity. Across major sectors; whether manufacturing, services, or technology; we have large, stable industries with a substantial pool of assets to evaluate. That breadth means we are not forced into narrow niches. Beyond diversity, the macro tailwinds are compelling. Strong domestic consumption and continued capex investment create a large and growing home market, while the China plus one dynamic opens up a genuine export opportunity that didn’t exist at this scale a decade ago.
The challenges are real and somewhat unique to India.
- First, not all businesses fully reflect their true worth on the books. Off-balance-sheet practices remain common in the SME segment, which complicates diligence and valuation.
- Second, entry valuations can be expensive. Private business owners in India set their price expectations against how publicly listed businesses trade, and Indian public markets have historically commanded premium multiples. However, that same dynamic creates a meaningful arbitrage: if you acquire well and build toward a public market outcome, the gap between private entry and public exit multiples works strongly in your favour.
- Third, many Indian promoters tend to deprioritize professionalization as the business scales. Finding businesses with genuine management depth, teams that can handle a transition and actually support a scaled-out outcome, is harder than it looks and requires real diligence.
To what extent do regulatory, legal, or ownership complexities in India affect your sourcing and execution process? Which sectors do you currently see as most suitable for SF acquisitions, and how would you define your current investment thesis?
On the regulatory and legal side, we, as well as the first wave of Indian searchers, have done substantial groundwork to understand the compliance and legal framework. That part is largely sorted now, and we expect it to get easier for searchers who come after us.
Ownership complexity is a different matter. India is predominantly a family business ecosystem, and we frequently encounter cap tables with multiple family members, each with their own expectations and asks. Any situation with a messy cap table is a non-starter for us; clean ownership is a hard prerequisite.
On sectors, our thesis is fairly defined.
- We are most excited about light manufacturing, particularly industrial components and auto components; it is a large, stable space with a deep pool of assets and real potential for platform creation.
- We are also very drawn to specialty chemicals and pharma CDMOs, where there is a meaningful structural tailwind owing to China+1 global sentiment.
- And finally, we are looking selectively at niche tech services businesses. Given India’s well-established IT heritage, there is a rich universe of assets here, but our focus is on embedded, specialized players that carry a lower risk of AI disruption.
What are the most important qualitative signals you look for in a founder when evaluating succession readiness? What role, if any, do you expect the former owner to play post-transaction, and how do you structure that relationship and the deal terms (e.g., reinvestment, earn-outs, seller financing) to minimize post-closing friction?
Having evaluated over 150 assets in the past four months, we have built a fairly clear playbook on what works and what doesn’t. The most important signal is intent. Opportunistic sellers, those primarily focused on maximizing valuation, are not the right fit for us. We are looking for true succession cases: founders who have built or inherited a business, navigated the journey from small to medium scale, and are genuinely emotionally invested in its legacy. Those sellers want the right partner, not just the highest bidder. We believe our backgrounds and operating orientation make us a compelling fit for exactly that profile.
Beyond seller intent, we evaluate redundancy deeply. Is there a strong management layer that can operate independently? Are customer relationships derisked from the promoter? Are the company’s finances cleanly separated from the promoter’s personal finances? These are non-negotiables for us.
Regarding the post-closing role, we don’t expect the former owner to be involved in day-to-day operations. What we do expect is a clean, structured transition, covering customer and key supplier relationships, technical knowledge transfer, and anything else requiring continuity. Beyond that, we want them available in an advisory capacity to support the right outcomes.
On deal structuring, we strongly prefer residual equity and seller financing over earn-outs. Earn-outs can create misaligned incentives and put buyer and seller at odds over short-term results. Residual equity and seller financing keep long-term objectives aligned, which is where we want the relationship to be.
What advice would you give to other aspiring searchers in India who are considering launching a SF today? How do you think the role of local versus international capital will evolve in Indian SFs over the next 3–5 years?
To anyone considering launching a search fund in India, the opportunity is real and the timing is good. Don’t overthink it, get started.
Here are a few specific pieces of advice on how to approach the journey.
- First, don’t rely on international capital as your primary source. Indian regulation is structured in a way that domestic capital will be the primary driver of acquisition financing. Build local capital pools first, and then approach international investors, not the other way around.
- Second, don’t get too drawn into the transaction journey. Deal-making is only one part of the job, and arguably not the most important part. The bigger challenge is running and scaling the asset post-acquisition. Before you commit to a search, honestly evaluate yourself not just as a deal-maker but as an operator. How well-suited are you to actually deliver value inside the business you are acquiring? That question matters more in the long run.
On the evolution of local versus international capital, we are genuinely optimistic. We strongly believe the domestic capital pool will expand significantly, with a growing base of patient capital actively looking to back searchers. We are very early in our journey right now, but in five years, Indian searchers may not even need to look outside the country to raise capital for acquisition financing.
