‘Ability to stay invested forever’: Zerodha allocates Rs 1,000 cr to Rainmatter to back startups

Zerodha has increased its allocation to its startup accelerator fund, Rainmatter, announced Nithin Kamath on Wednesday. Kamath said that they have increased the allocation by an additional Rs 1,000 crore. The fund, he added, had invested close to Rs 400 crore over the last seven years. 

Kamath said that when Zerodha was slowly growing, they realised that one problem to solve was to help expand capital markets as well as increase access. He said that in order to achieve the goal, an entire ecosystem had to exist. Rainmatter Fintech was born out of that idea to help startups. 

As Zerodha grew, their allocation to Rainmatter grew as well. “We have now partnered with over 80 startups and have invested close to Rs 400 crores over the last 7 years. While we started out by backing tech entrepreneurs who were helping people do better with their money, it has now extended to those helping people make healthier choices, getting educated, and those who are working on the much harder problems of climate change and creating livelihoods,” said Kamath. 

“We are now increasing our commitment by increasing the allocation by an additional Rs 1,000 crore in a perennial structure or with the ability to stay invested forever,” he said explaining that patient capital with no exit mandates that founders can benefit especially when it takes longer for a startup in India to become resilient and sustainable. 

Kamath explained the rationale behind the perennial structure with Zerodha’s example. He said that they believe Zerodha grew as much as it did because they had the freedom to build what they thought was right without any pressure to grow quickly. “We believe that founders can similarly benefit from investors who bring in long-term patient capital—investors who are willing to stick around and help in any way possible, where the goal is to build a good, sustainable, long-term business, and not just to generate rapid returns. We can remain invested forever, as the investments we make are from our own capital,” he said. 

The financial returns go back to supporting more entrepreneurs as well as to the Rainmatter foundation, said Nithin Kamath. He said that they avoid taking board seats and in turn help as mentors and through collaborations. 

Zerodha’s Rainmatter has investments in fintech, health and wellness, storytelling and education, and climate change, environment and livelihoods startups. 

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