The Indian startup ecosystem, which saw record investments in 2021 at $42 billion, is currently going through a funding winter, with many companies struggling to raise fresh capital. Despite this, several venture capital and private equity funds have secured commitments to the tune of several billion dollars from limited partners.
Speaking on the sidelines of VCCicrcle’s The Pitch event in Delhi, Merak Ventures Partner Sheetal Bahl said that the presence of this massive dry powder will encourage more people to pursue their entrepreneurial aspirations.
“Even though there is a funding winter going on, the corpus that VCs have is humongous. Billions of dollars are coming into the startup ecosystem sooner or later. And that encourages more people sitting on the fence to take the leap,” said Bahl. This will result in the ecosystem witnessing more dedicated founders and better companies, he added.
In fact, the total LP commitment to private equity, private credit, venture capital and public market alternative investment funds focused on India crossed the milestone of $100 billion earlier this year, VCCircle reported in May.
In the past few years, India has seen a wave of new startups becoming a part of the burgeoning Indian startup ecosystem. For instance, close to 1 lakh companies have been recognized as startups since the launch of the central government’s flagship scheme Startup India in 2016.
Pristyn Care co-founder Dr Garima Sawhney pointed that there has been a cultural shift while a lot of other factors aided in the growth of the number of startups in India. She credited India’s economic growth, rapid digitalization, and increased interest of investors as a result of the first two factors behind this tremendous growth.
Shadowfax co-founder Akshay Ghulati, on the contrary, said that entrepreneurship existed in India in the form of MSMEs. “India’s entrepreneurial journey started with a boom of MSMEs in the 1990s. It is the spirit of MSMEs that is now translating into newer ideas and startups”
Sawhney also said that there is a lot of information now available on fingerprints, which is helping entrepreneurs experiment with their ideas. She also said that successful entrepreneurs becoming role models is also a big factor in why many are more willing to pursue entrepreneurial journeys. All these factors combined have helped the Indian startup ecosystem witness a golden period in the last four to five years, she said.