Strong fundamentals make Indian startup ecosystem attractive, say VCs

By Thimmaya Poojary
November 18, 2022, Updated on : Fri Nov 18 2022 02:16:31 GMT+0000
Strong fundamentals make Indian startup ecosystem attractive, say VCs
The fundamentals of the Indian startup ecosystem like entrepreneurial activity, tech framework, and market opportunities make it an attractive option for global investors, venture capitalists say.
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The imminent global recession and macroeconomic factors have led many investors to hold back on their purses, creating fears of a ‘funding winter’. However, venture capitalists are upbeat about startups in India, and say they will continue to attract capital given the strong foundations of the ecosystem coupled with the positive trends in the state of the country's economy.


At TechSparks 2022, YourStory’s flagship startup-tech event, during a panel discussion on ‘Funding 101: Navigating the global winter, VCs asserted that despite the present slowdown in funding activity, the situation is not as bad as it looks.


Mandeep Julka, VP, Chiratae Ventures, said, “There is some dampening of spirits but India has excellent entrepreneurs and our digital ecosystem is only evolving for the better.”


She assessed that while the impact of funding slowdown will be different across stages, those looking for large capital will find it challenging to fundraise. On the other hand, the ticket sizes of early-stage deals will remain almost the same.

Shanti Mohan, Founder, LetsVenture added, “Investors are taking longer to make their decision but good companies will continue to get funding though founders should be prepared for this slowdown period.”

Ankur Khaitan, Principal, Fireside Ventures opined, “The fundamentals of building a business will not change and founders will have to navigate through this phase. There might be tough questions for them but it is not all gloomy.”


The panellists were of the consensus that startups with a strong business model, execution capability, and a talented team will always find the capital. 

Funding

At the same time, the macroeconomic fundamentals of India are also making the country an attractive investment destination. Shanti said, “There is no other market globally which is as stable as India and I think we are going to see a much larger startup ecosystem in the future.”


Mandeep also felt there are enough tailwinds in the Indian economy, and the country’s tech ecosystem is being talked about more positively.


Ankur said, “The India consumption story will only get stronger and the opportunity spectrum has changed for the better.”


Given the present environment, when will there be a turnaround in terms of the fund flow? Shanti predicted that the situation will change in the first quarter of next year.


According to Mandeep, this will largely depend on global macroeconomic conditions. If world economies can avert a global recession and curb inflationary pressures, there will be renewed interest from investors.


Ankur said, “There is no dearth of deal flows, however, one needs to be cautious and plan for any contingency for the next 18-24 months.”

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Edited by Kanishk Singh