Strong fundamentals make Indian startup ecosystem attractive, venture capitalists say

The impending global recession and macroeconomic factors have led many investors to contain their portfolios, raising fears of a ‘funding winter’. However, venture capitalists are bullish on startups in India, saying they will continue to attract capital given the strong foundations of the ecosystem along with positive trends in the state of the country’s economy.

At TechSparks 2022, your history flagship event of emerging technology, during a panel discussion on ‘Funding 101: Navigating the Global Winter’, venture capitalists claimed that despite the current slowdown in funding activity, the situation is not as bad as it seems.

mandeep julkaVP, Chiratae Ventures, said: “There is some discouragement, but India has great entrepreneurs and our digital ecosystem is only evolving for the better.”

She assessed that while the impact of the funding slowdown will be different at each stage, those looking for big capital will find it challenging to raise funds. On the other hand, the ticket sizes of the early-stage offers will remain almost the same.

Shanti Mohan, founder of LetsVenture, added: “Investors take longer to make a decision, but good companies will continue to receive funding, although founders need to be prepared for this slowdown period.”

Ankur KhaitanThe director of Fireside Ventures opined: “The fundamentals of building a business will not change and the founders will have to go through this phase. There may be tough questions for them, but it’s not all bleak.”

The panelists agreed that startups with a strong business model, ability to execute, and a talented team will always find capital.

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

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

Ankur said: “India’s consumer story will only get stronger and the spectrum of opportunities has changed for the better.”

Given the current environment, when will there be a change in terms of cash 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 avoid a global recession and rein in inflationary pressures, there will be renewed interest from investors.

Ankur said: “There is no shortage of business flows, however, one must be cautious and plan for any contingencies for the next 18-24 months.”

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