“India’s pragmatic approach towards navigating the new global order and focusing on leveraging the opportunities it presents has not only led to minimal impact on the growth numbers but have also positioned India as key destination for foreign investors,” says Ashish Kumar, Co-Founder & General Partner, Fundamentum Partnership, outlining the opportunities India’s growth story presents for investors and entrepreneurs.
Q: What makes you optimistic about India?
India is a large growing democracy with a young population. The Indian economy has shown resilience and there is greater formalisation, higher financial inclusion, and economic opportunities created by digital technology-based economic reforms. Some key factors that are favouring it:
Favourable Macro-economic environment: Despite the global headwinds, India has grown at a rate of 7% in 2022, significantly higher than a lot of developed economies. It continues to be the largest growing major economy. India’s pragmatic approach towards navigating the new global order and focusing on leveraging the opportunities it presents has not only led to minimal impact on the growth numbers but have also positioned India as key destination for foreign investors.
Exceptional Digital Infrastructure: India has shown how smart investments can unleash an amazing cycle of ingenuity that changes everything from how people save money to how governments serve their citizens. India has developed a world-leading approach to digital infrastructure that has enabled creation of new businesses and resulted in an expanded consumer base. IndiaStack, UPI or ONDC have fundamentally changed the way both how entrepreneurs think about business and the opportunities for the consumers. The JAM trinity (Jan Dhan – Aadhar – Mobile) has led to unprecedented increase in access to financial services enabling better ease of living for millions.
Young startup ecosystem: India is in its teens regarding its startup ecosystem. The capital efficiency of all the startups in India has become significantly better in the last 12 months. Entrepreneurs also know that simply following the US or China playbook would not work because the GDP per capita there is higher. In India, companies will have to perpetually go deeper in a market rather than only broader. For example, in case of US or China, you can sell one product to multiple people because the markets are very deep on the other hand markets in India are still becoming deep, which means that we have to build that ecosystem play. This means we are shaping the ins and outs of the ecosystem with course corrections. India is currently the third largest startup ecosystem in the world just after US and China. In 2022, Indian startups raked in $24 Billion from international investors alone, which is twice the funding in 2019 and 2020.
Demographic dividend: The median age of the Indian population is less than 29 years, and in 2020, India had about 67% of its population in the working age group of 15-64 years. CII reported that if the demography is productively employed, India will leapfrog to a $9 trillion economy by 2030.
Expansion of the aspirational Indian middle class: The Indian middle class has emerged as a significant part of the puzzle of India's GDP growth. The government's unambiguous focus to rationalize the tax burden of the middle class has put more money in their hands, giving them more spending power.
Q. For entrepreneurs and investors, how is India model of doing business different than other countries?
The India model entails a few key things for entrepreneurs and investors. Firstly, perseverance is vital as it can take time to build a successful business in India. Secondly, being full stack is important, which
means owning the entire value chain of your business. Thirdly, identifying trends earlier than others can is key to success. This means spotting opportunities in smaller markets and not underestimating the pace at which the market is growing. Investors often seek comfort in larger markets, but spotting the gap in the market and investing first can lead to being a leader with little to no competition. To succeed in India, it is also important to align yourself with where India is heading to participate in the journey as the opportunities will be faster, and your ability to win will be larger.
Q. How do you see technology evolving in the next 10 years in India?
There are a few ways in which technology will evolve in the next 10 years in India. Firstly, there will be disruption in AI and its application in multiple industries. Secondly, there will be an interplay between the private and public stack, where a lot of common digital infrastructure will become public stack. This means businesses will need to focus on significantly higher customer experience, as the moment infrastructure becomes commoditized, the public customer experience will win. Thirdly, cybersecurity will become more important as India becomes more digital. This will lead to the emergence of new security algorithms and the importance of quantum computing. Overall, businesses will need to be ahead of the curve and understand the interplay between public and private infrastructure to succeed in the evolving technology landscape.
Q: What is your view on India's resilience to external shocks, both ‘Black Swan’ events and cyclical challenges?
A: I believe that India’s growth fundamentals are strong and as such there are certain advantages we have in terms of navigating challenges. However, in order to truly become resilient to external shocks, both natural and man-made, we need to put in more effort in creating self-sufficiency. India is currently only midway there, as the country is very dependent on external capital. Every time there is a shock, there is automatically a flight to safety, and India must prove itself in terms of governance, transparency, and predictability.
About Fundamentum Partnership
Fundamentum Partnership, one of India’s first home-grown tech ventures funds is led by a team of ex-entrepreneurs - Nandan Nilekani, Sanjeev Aggarwal, Ashish Kumar and Prateek Jain. The fund has an approach of concentrated portfolio and invests in early growth stage start-ups.
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