Venture capital firm Cactus Partners plans to invest in 13-15 companies through its Fund II, which is targeting a corpus of about Rs 1,600 crore. The firm has deployed its Rs 630-crore Fund I across 13 companies including Lohum, Indigrid Technologies, Bellatrix Aerospace, Brandworks and Kapture CX.
“Our strategy is to identify high-quality businesses and make investments in those businesses at the right valuation,” Amit Sharma, general partner, Cactus Partners, told FE.
Under Fund II, Cactus plans to write initial cheques of ₹60-100 crore, which Sharma said is the optimal size for its investment strategy. The firm typically backs companies raising $10-20 million in a funding round and intends to lead deals with investments of $6-10 million, syndicating the remaining capital with other investors.
Focus Sectors
The firm invests in three broad sectors–advanced manufacturing, enterprise technology and consumer technology. Within advanced manufacturing, it focuses on areas such as robotics, electronics design and manufacturing, semiconductors, defence, spacetech, critical minerals and the Internet of Things (IoT). Sharma said India’s push towards innovation, indigenisation and various production-linked incentive (PLI) schemes has created opportunities for companies building precision components, advanced materials and high-tech products that were previously imported. Investments in Lohum, Indigrid Technologies and Brandworks reflect that conviction, he added.
In enterprise technology, Cactus is closely tracking artificial intelligence (AI), machine learning, cybersecurity, healthtech and vertical software solutions. “We are cognisant of the fact that we invest for 4-6 years, and short-term fads don’t last that long,” Sharma said, adding that is why the firm remains focused on businesses with durable economics and multi-year growth potential.
The firm’s recent investment in Bellatrix Aerospace sits squarely in spacetech and deeptech manufacturing intersection. On the consumer side, the firm prefers businesses with genuine unit economics and repeat purchase behaviour over those built purely on discounting. “What ties all of this together for us is not the label of the sector but whether a company has already found product-market fit and is ready for what we internally call the one-to-10 journey–from an established base to meaningful scale,” Sharma said.
Over the past 15 months, Cactus has made three new investments–Bellatrix Aerospace, Showroom B2B and Brandworks Technologies–while also participating in follow-on investment rounds for Indigrid, Ananant Systems, Kapture and Intangles. “Bellatrix, our latest new investment, is at an exciting phase as it is entering into scaling-up mode with strong commercial order flow and pipeline. The company is also working on a complex project of putting ultra-low-earth orbit (ULEO) satellites in space, that could make us the first in the world to do so,” Sharma said.
Portfolio Traction
The firm’s portfolio companies recorded an average annual growth of 66% in FY26, which it expects to accelerate to 75% this financial year.
“The strong and consistent compounding will help us deliver strong investor returns. We expect all our portfolio companies to contribute to that,” Sharma said.
Looking ahead, Cactus is evaluating new technologies and business models emerging in cybersecurity and quantum technologies. “The interplay of quantum and AI will be interesting to watch. These are interesting times, as I don’t remember so many new technologies emerging simultaneously and we believe that will give rise to multiple opportunities,” he said.
Further, Sharma sees India’s startup ecosystem maturing, with founders demonstrating stronger operational discipline and a sharper focus on sustainable business models. “Valuations across most of the rounds we see today are far more reasonable than they were a few years ago, with the exception of some sectors. Founders are looking for the value addition that the investors can do rather than just valuation,” he said.
The firm avoided investing in edtech under Fund I because most of the businesses in the sector were overvalued and valuations were not in sync with the fundamentals. Sharma said it now sees similar excesses in pockets of AI, spacetech and quick commerce, where valuation is already discounting multi-year growth and there is hardly any margin for error.
“Our caution comes down to one simple test. We ask whether the business would still be attractive if capital became scarce tomorrow. If the answer depends entirely on continued access to funding rather than the strength of the business model, recurring revenue and underlying unit economics, we tend to stay away regardless of how much attention a sector is getting,” he said.