Venture capital and private equity firms have sold over Rs 67,170 crore in shares of newly listed new-age companies by September 2026. This wave of exits has triggered a debate between mutual fund managers and early backers over corporate governance. As institutional investors replace private owners, the market is focusing on how these companies will maintain oversight once their founding private supporters depart.
India’s public market is seeing a major change in ownership as venture capital and private equity firms move to sell shares in newly listed companies. By mid-September 2026, secondary market transactions in these new-age firms reached Rs 67,170 crore, with most of this selling happening over a five-month period. This trend is marking the end of the long-term investment cycle for many early backers of Indian startups.
The Governance Debate
This mass exit has created a conflict between mutual fund managers and venture capital firms regarding the future of corporate governance. S Naren, Chief Investment Officer at ICICI Prudential Asset Management Company, has expressed concerns about what happens to oversight once private founders and venture firms leave the board or reduce their presence. In traditional family-run companies, promoters often provide a long-term anchor. In contrast, new-age companies often lack such structures, making them dependent on external board members.
Mutual fund managers argue that as these private backers exit, the responsibility of ensuring the company stays on the right track shifts to independent directors and public shareholders. The concern is that if founders are no longer supported by their original private backers, the burden of maintaining stability rests solely on a board that may need to act more like traditional promoters to protect investor interests.
The Venture Capital View
Leading venture capital firms, such as Accel, Elevation Capital, and Lightspeed India, have responded to these concerns by defending their exit strategy. They point out that venture firms operate on long-term cycles, often staying invested in a company for up to 13 years before looking for an exit. For these firms, an initial public offering (IPO) is the planned end of their investment journey, not a sudden decision to abandon the company.
These firms argue that their long holding period demonstrates their commitment to building the business. They suggest that the responsibility for stewardship now naturally shifts to the public market participants who have purchased these shares. Essentially, they believe that governance is a shared duty that must now involve public investors and the company’s independent directors.
What Investors Should Monitor
For regular investors, this transition represents a change in how new-age companies are managed. With the departure of early backers who helped build these firms from scratch, the focus for investors is shifting toward the quality of the board of directors.
Investors may want to track how independent directors in these companies approach their duties. The presence of strong, active, and independent board members is becoming a key indicator of how well these companies will handle growth and risk after the original private backers have sold their shares. The ability of these firms to maintain strong internal controls and ethical standards without their original founders or venture backers will be a critical monitorable in the coming quarters.