VC’s Budget Wishlist, Shadowfax’s D-Street Debut & More

The VC Wishlist For Budget 2026

India’s venture capitalists (VCs) have a long wishlist this budget season. Investors believe that the next phase of startup growth will be powered by deeper reforms and policy execution, and not just promises. So, what exactly does the VC ecosystem want from the Union Budget 2026?

Going Beyond Equity: As the ecosystem enters a more disciplined phase, investors are calling for policy frameworks that support blended capital structures – venture debt and sector-specific credit that align with cash flows. They also want stronger risk-sharing mechanisms to help MSMEs and growth stage startups access non-dilutive capital. 

Unlocking Domestic Funds: While foreign capital moderated in 2025, domestic resilience became the ecosystem’s bedrock. VCs are now urging the government to unlock ‘patient capital’ by allowing large domestic institutions, such as pension funds and provident funds, to participate in private markets. They also want tax sops that nudge certain capital gains into local fund-of-funds.

The Deeptech Moat: India’s VCs and PEs also believe that this year’s budget must ensure that high-risk innovation grants reach startups that are building genuine IPs, rather than those merely assembling imported components. They also want the upcoming budget to speed up execution and inter-ministerial coordination for the INR 1 Lakh Cr R&D fund announced last year.

Investments & Exits: Amid the ongoing startup IPO spring, VCs want the upcoming budget to signal a move toward pricing discipline to protect the trust of long-term investors. At the same time, they want angel investing to be democratised, allowing informed professionals to invest modest amounts with guardrails, so that early stage capital can receive a boost.

As finance minister Nirmala Sitharaman prepares her ninth budget speech, here’s what India’s VCs want from the government. 

From The Editor’s Desk

Shadowfax’s D-Street Debut Today

• The logistics unicorn is all set to list on the bourses today. Eight Roads has emerged as the biggest gainer from the IPO, booking a 10.4X return by selling Shadowfax shares worth INR 197 Cr. Flipkart also netted INR 400 Cr via the OFS.
• Shadowfax’s IPO comprised a fresh issue of shares worth INR 1,000 and an OFS of INR 907 Cr. The public issue was oversubscribed 2.7X. The logistics major is targeting a valuation of INR 7,169 Cr. 
• Founded in 2015, Shadowfax offers end-to-end logistics solutions to ecommerce platforms across 18,000 pincodes. It clocked a profit of INR 21 Cr in H1 FY26 against an operating revenue of INR 1,805 Cr. 

4baseCare Nets $9.8 Mn

• The healthtech startup has raised INR 90 Cr as part of its ongoing Series B round to expand its network and strengthen its global presence. The round pegged 4baseCare at a nifty INR 344 Cr.
• Founded in 2018, 4baseCare is building an AI-driven platform to analyse clinical and genomic data to enhance precision medicine, diagnosis and treatment for cancer patients. 
• The investment aligns with growing investor interest in the AI-led healthtech market. In 2025 alone, AI-driven diagnostics and provider operations captured 44% of the total $700 Mn healthtech investment.

WeWork India’s Q3 Turnaround

• The coworking giant reported a consolidated profit of INR 16.8 Cr in Q3 FY26 against a loss of INR 83.1 Cr in the year-ago quarter. This marks the company’s second consecutive profitable quarter. 
• This came on the back of operating revenue zooming 29% YoY to INR 634.1 Cr, driven largely by disciplined real estate strategy and sustained demand. Portfolio occupancy climbed to a record 83.9%  from 77.3% in Q3 FY25. 
• At the end of December 2025, the company’s scale grew to 73 centres and 1.22 Lakh desks across India. Going forward, WeWork plans to provide “GCC-in-a-box” solutions for international firms expanding in India.

Tatas To Anchor Indian Chip Founders

• IT minister Ashwini Vaishnaw has said that Tata Electronics’ upcoming Dholera plant will support chip ‘tape-outs’ for domestic startups in the range of 28–90 nm nodes.
• Separately, the minister also reiterated the government’s long-term goal of enabling domestic manufacturing of advanced chips, with a target of reaching 3 nm chip production by 2032
• This will be a significant technological leap as the state-run SCL Mohali currently operates at the 180 nm node. The facility is being modernised with an investment of INR 4,500 Cr. 

Goa Mulls U-16 Social Media Ban

• Goa’s IT minister Rohan Khaunte has confirmed that the state government is studying Australia’s social media ban for kids under 16 years of age for local implementation. 
• This follows Andhra Pradesh’s earlier move to form a high-level ministerial panel, led by state IT minister Nara Lokesh, to submit recommendations on a similar ban within 30 days.
• Social media regulation is primarily a Union subject, so the local government’s plan depends on Centre-State coordination, or on designing state-level measures that can coexist with national rules governing digital intermediaries.

Inc42 Markets

Inc42 Startup Spotlight

How HYDGEN Is Decarbonising Hydrogen?

India makes about 6.5 Mn tonnes of hydrogen each year, but most of it is produced from natural gas with a steep carbon footprint. Meanwhile, green hydrogen is not only more expensive but also costlier to move. Enter HYDGEN, a startup trying to tackle this bottleneck.

Going Green: Founded in 2024, HYDGEN offers on-site, low-cost clean hydrogen. The startup builds hydrogen generators using proprietary AEM (anion-exchange membrane) electrolysers that split water to produce high-purity hydrogen. By producing hydrogen at the point of use, the startup cuts logistics overhead and reduces leakages and wastage.

HYDGEN’s Deeptech Stack: The startup’s modular electrolyser systems span 1–100 kW, with a 250 kW stack under development. This varied portfolio helps its customers scale output without splurging heavily on a single big plant. HYDGEN is targeting chemicals, metals, cement and mobility, positioning its systems as a transition layer from grey to green hydrogen without disrupting existing operations.

As India’s green hydrogen mission targets an output of 5 Mn tonnes by 2030, can HYDGEN help factories become truly green?

Infographic Of The Day

No fresh capital, no founder exit — just a major ownership reset. PhonePe’s OFS-only IPO is all about who stays and who sells.

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