Two prominent investment firms have formed a strategic alliance to support Indian startups from their earliest days, targeting entrepreneurs developing solutions capable of serving the South Asian nation's 1.4 billion population at scale.

The collaboration, announced on Monday, represents the first time Prosus has invested at the formation stage. Both organisations will co-invest from a company's inception, focusing on ventures addressing systemic challenges across automation, energy transition, internet services and manufacturing sectors.

India's digital economy is experiencing rapid expansion, with over one billion internet users and more than 700 million smartphone owners—making it the world's second-largest mobile market behind China. Government-backed infrastructure including the Unified Payments Interface for digital transactions and Aadhaar identification system has created foundations enabling startups to build and scale services efficiently.

Yet much Indian startup activity has historically centred on adapting global business models rather than addressing large-scale domestic challenges. The Accel-Prosus alliance aims to shift this dynamic.

The partnership extends Accel's early-stage founder programme, Atoms X, launched in July to support what the firm terms "leap tech" startups—companies tackling large-scale, systems-driven problems.

"We feel now the time is right for the Indian startup ecosystem to move from adapting global businesses to creating Indian models that help India leapfrog its journey in becoming a developed country," said Pratik Agarwal, a partner at Accel, in an interview.

He noted that startups working on population-scale solutions often struggle securing sufficient early capital, given lengthy development periods and risks of substantial dilution before achieving meaningful traction.

Under the arrangement, Prosus has committed to matching Accel's investment in each company, with initial funding ranging from $100,000 to $1 million—figures that could increase over time.

"We could both continue to do our own things in this space, but given how large the ambition is with these founders, and given how difficult a problem that they are trying to solve, it made all the sense for us to put our resources together," said Ashutosh Sharma, head of India ecosystem at Prosus.

Traditionally, Amsterdam-headquartered Prosus has concentrated on late-stage investments globally. The firm counts food delivery platform Swiggy, social commerce company Meesho, and payment processor PayU amongst key Indian portfolio companies.

Whilst Prosus has pledged to match Accel's investment amounts, Sharma indicated the firm is not necessarily seeking equivalent equity stakes.

"For us, getting that equity in the first round is not important at all," he stated. "If we can truly identify a Swiggy, a Meesho, an iFood, or a Tencent of tomorrow—today—that is success enough."

The partnership also broadens both firms' Indian activities. Recent months have seen the organisations co-invest in ventures including an AI-powered tutoring platform called Arivihan and low-cost internet service provider Wiom.

"Because of this AI-led disruption that is happening around us, some countries will be disproportionate beneficiaries of this—and some countries will be disproportionate net, net losers," said Sharma. "Two countries that seem very placed to be beneficiaries are the U.S. and China. Now in that world order, and in that world narrative, what is India's space? And can India, therefore, as part of this 'leap tech' revolution, find the rightful place, not just in AI, but beyond AI, is the other, let's say, ambition that we have with this programme."

The alliance arrives amid mounting geopolitical tensions disrupting capital flows, technology supply chains and market access—prompting global investors to reassess where capital can be deployed safely at scale. With a substantial domestic market, expanding digital infrastructure and deepening technical talent pool, India increasingly appears as a strategic priority in this landscape.

"India's place in the global economy and the geopolitical system is such that India needs to chart and accelerate its path like a self-sovereign, independent, developed country," Agarwal explained.

Accel has already supported more than 40 startups through its early-stage Atoms programme. Over 30% have subsequently secured follow-on funding from external investors, with Accel itself leading more than half those rounds.

Venture capital funding in India fell 25% year-over-year to $4.8 billion during the first half of 2025, according to data provider Tracxn, with late-stage deals dropping 27% to $2.7 billion and early-stage funding declining 16% to $1.6 billion.

Nevertheless, India remains a priority for global investors, driven by its large population and expanding digital adoption. Last September, eight American and Indian venture capital and private equity firms—including Accel, Blume Ventures, Celesta Capital and Premji Invest—formed a coalition to back deep technology startups with over $1 billion in commitments. The Accel-Prosus partnership represents the latest example of how global investors continue placing long-term bets on India's entrepreneurial ecosystem.

The strategic focus on "leap tech" ventures reflects growing recognition that India's development trajectory need not replicate paths taken by earlier industrialised nations. Instead, modern digital infrastructure and emerging technologies offer possibilities for accelerated progress addressing challenges around healthcare delivery, energy access, education quality and manufacturing efficiency.

Whether this investment approach successfully catalyses a new generation of Indian startups building indigenous solutions at population scale remains to be seen. The partnership's structure—combining patient capital with sector expertise from both established firms—aims to provide founders the resources and runway necessary for ambitious, long-term problem-solving.