Funders And Founders: The Rise and Rise Of Indian Capital

Startups in India have received about $885 million in August 2022. By the end of 2023 it is expected that the total funding in Indian startups will reach around $180 million. 

Anup Jain, Managing Partner, Orios Venture Partner said, "The global economy is highly volatile; there is inflation. The Indian government played really smart during the tough times and saved us from inflation. Domestic consumption is high; the whole country is busy producing for domestic consumption."

With the advent of UPI, easy access to credit, and climate-conscious actions Further, electric mobility is growing at a 65 percent CAGR, making it the cheapest form of mobility. Therefore, sectors such as financial services, electric mobility and health are expected to see growth, experts said.

Precisely touching upon the investment ecosystem, Jain added that growth-stage startups require large checks ranging from $25 to $100 million. Furthermore, it necessitates a large investment and is riskier. VC firms only believe in high-growth businesses and show their confidence by leading prayers when it comes to late-stage startups.

"In the domestic market, there is huge capital available for startups. However, there are some areas on which attention needs to be focused. Growth capital will only follow the market leaders; later on, investing in the third or fourth player in the market has dried up," Ashish Agarwal, Resurgent India mentions. 

He further explained that VC investing at an early stage focuses on companies where the founders have an understanding of their business. Investors are betting on the founders; the idea should be unique, and the startup should be profitable in 3 to 4 years down the line.

Apart from traditional asset classes, second generation entrepreneurs, high net worth individuals, and multimillionaires are investing in homegrown startups.

"Unit economics come into the picture when it comes to investing in growth-stage startups. Investors look at the growth plan of the company over the next five years in order to give them the right exit. Further, funders look at the plans of the company to open an IPO or engage in mergers and acquisitions. Investors also look at the innovation in the DNA of the startup. Ashish Padiyar, co-founder and chief strategy officer at Auxano Capital mentioned.

Second-generation entrepreneurs understand the asset class very clearly. Young investors understand how the dynamics of investment have been changing; they understand the digital space. Companies have separate funds to invest in the startup ecosystem.