Even as the startup ecosystem in the country is throwing up early signs of an impending shakeout, fund managers and entrepreneurs operating in the sector say it is a healthy development and that it will lead to strong players emerging in the market wiping up the not-so-serious ones.
The nature of the startup business is such that even if one of ten businesses becomes a blockbuster, the purpose is served, said Archit Garg, Vice President – Investments at Rabo Private equity in a panel discussion on 'Emerging trends in India & participation of Traditional capital for early stage businesses', at an event hosted by BW Businessworld to launch BW Disrupt, a website dedicated to knowledge, opinions and analysis on startups and young entrepreneurs.
The panel was moderated by Shailesh Vikarm Singh, Executive Director, Seed Fund and its speakers such as, Anirudh Suri, Founding Partner, India Internet Fund, Manoj Dawane, VP, Ericsson India and Vishal Jindal, Director, Carpediem Capital echoed the same sentiment, saying the sector has lots of interesting business opportunities for fund managers.
“Innovation is something that will continue in the country and therefore there are investors waiting to take exposure in the sector,” said Suri of India Internet Fund. Apart from risk capital investors such as private equity and venture capital funds, today with the sector evolving, several traditional business houses and HNIs from the corporate world are coming forward to fund budding entrepreneurs.
“Those in the corporate world who are in their late 40’s and have typically not become entrepreneurs earlier are now facilitating emerging businesses and are themselves becoming part of them,” said Shailesh Vikarm Singh of Seed Fund.
Speaking at the launch Annurag Batra, Chairman and Editor-in-Chief, BW Businessworld pointed towards the heightened activity in the startup universe and the need for a separate platform for catalyse this outburst of action.
After a spate of innovation and increased investor interest in the startup landspace, the slowdown actually began after the stock market collapse in in China in August. This led to tremors elsewhere in Asia and even across the globe, prompting fund managers to instantly curl up into a wait-and-watch position. After all, nothing that happens in China can be seen in isolation. This is where the whole slowdown began.
Already, too much capital has flown into the startup ecosystem and it’s natural that there will be some correction. That correction will see some companies emerge as winners especially in the mobile and internet space which is seeing healthy growth in India. This was one of the key takeaways of of the event.
As per a Grant Thornton data, of the total number of 863 PE/VC deals in Jan-Oct period 2015, 414 comprised start up investments. But in the first half of 2015, as many as 363 venture capital deals were sealed, which were three times more than the number of 99 private equity deals. This definitely shows how the number of deals in the startup deals have come down in the last few months.
