Light at the End of the Tunnel Sethi shares his insights for India's startup industry amidst the slowdown
By Deepa Vaidya
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Sudhir Sethi, Founder and Chairman, Chiratae Ventures, shares his view of the logjams in the next round of funding especially in the wake of funding winters and the GoMechanics and SVB debacles. He says "All is not lost. I want to share with you how the 'start-up industry' is growing today and how we see it in the market space. Of course, there is Morgan Stanley's prediction that 20% of the world's GDP will be powered by India in a 10-year cycle. Consumption is increasing. Exports are improving drastically right now; the market cap of public equities has crossed the GDP. This has happened in many countries where new tech is emerging in a very big way."
"Renewables are increasing day by day. So what we are seeing is a very drastic change on the ground leading to a different investment climate in the country. In the next 5-6 years, India is likely to absorb approximately $350 billion worth of PVC tech capital, most of it will be tech and return approximately $300 billion."
"I define this opportunity as digital India, which is a $1 trillion opportunity by 2028. One of the five elements is the startup element. Based on our research, the revenue of the startups today is $40 billion since 2007. The other thing which is happening is, many of the startups are reducing the dependence on traded products. Third, consumer companies are going back into vertical integration. Fourth, climate is emerging. Finally, the digital public infrastructure is one of the most innovative forms of infrastructure on the digital side made by any country in the world. UPI is a forefront runner, without which, India will not have digital platforms in the country. In a five year timeframe we believe UPI revenue will cross $100 billion."
"I also see billion dollar revenue companies among the new paradigms emerging. The other thing which I truly believe has happened is based on a need which India has. I propose to you that India's addressable market potentially is, population scale market. How does the entrepreneurial world using technology service billion plus people who need loans, insurance and efficient health care?"
"And last but not the least, there is a market outside and how to get to that market is very interesting. I think UPI, potentially ONDC are extremely interesting digital public infrastructure and entrepreneurs can build products to scale along with UPI."
"I think emergence of capital is the fuel for the nation, it's going to increase in leaps and bounds. I also think that product companies are with IP and patents, monetisable will increase as we move forward."
"VCs and PEs are delivering exits. In the last five years, they have returned $100 billion worth of exits, compared to $140 billion worth of investing."
Speaking of risks of investing in India, "It is very crucial that regulatory tighten ups happen in startups and VCs to address some risks which are there in the market space."
"The reason for funding winter is not because there is no large capital unavailable. However, due to market situations, decision making is low, valuations are lower and only very good, sound propositions are getting funded overall."
