Startup Mahakumbh | Consultation on deep tech policy in final stages: DPIIT Secretary

Thousands of start-ups and investors in areas such as artificial intelligence and software-as-a-service, agritech, business-to-business and manufacturing, climate tech, deeptech, direct-to-consumer, gaming and esports, fintech, and incubators and accelerators are expected to participate in the event.

The event is being jointly organised by industry bodies Assocham, Nasscom, Bootstrap Incubation and Advisory Foundation, TiE and Indian Venture and Alternate Capital Association (IVCA). It is also supported by the DPIIT, MeitY Startup Hub (MSH) and Invest India.

During her Interim Budget speech earlier this year, Finance Minister Nirmala Sitharaman had announced a Rs 1 lakh crore fund to provide long-term, low-cost or zero-interest loans for research and development. She had also promised to launch a new scheme to strengthen deep-tech capabilities in the defence sector.

Debjani Ghosh, president of IT industry lobby group Nasscom, said that India should prioritise the potential opportunities of artificial intelligence (AI) with the right guardrails, rather than being pessimistic about the technology. “I think what India has to do differently is, while the rest of the world is going around in circles figuring out the risks, the fear narrative rules the west, India has to be different and stand up and talk about the opportunity narrative of AI, with the right oversights,” Ghosh said.

Former Niti Aayog CEO and India’s G20 Sherpa Amitabh Kant called India’s start-ups a “national asset” that have grown to be collectively worth $350 billion in the last eight years. He said that while India is currently home to the third biggest start-up ecosystem in the world, the next big challenge is to take it to the top spot in the next five years.

At a press briefing before the event, DPIIT Secretary Singh had said that the government’s aim was to improve India’s global ranking in terms of innovation.

“India ranks at 40 in terms of innovation and our goal is to move up from this. Our aim is to make Startup Mahakumbh not just a big event but also an annual event, which can further propel the growth of the Indian startup ecosystem. The event aims to unite innovators nationwide and transform it into the largest global event of its kind,” Singh said at the briefing.

2023 was a challenging year for Indian start-ups. They raised a total of $8.3 billion – the lowest they have raised since 2016 when there were much fewer of these firms. Indian start-ups also saw a decline of 72 per cent in the compound annual growth rate (CAGR) of funding in the last three years — a signal that the venture capital-fueled boom that followed the Covid-19 pandemic has ended. In 2022, the country added 23 unicorns, which is the term used to describe private businesses with a valuation of over $1 billion. In 2023, only two firms could attain that status. More than 20,000 people working at various start-ups lost their jobs in 2023.

2024 could see founders focus more on essential metrics such as increased profitability and reduced cash burn. But investors believe that the funding ecosystem may not get the same traction as in 2021.

With that trend, start-up founders and investors have started calling for support from India’s big legacy conglomerates to fund upcoming businesses in the country.

At the press briefing, Info Edge India’s Sanjeev Bikhchandani said that while money from venture capital firms or angel investors was only a part of funding source for start-ups, “there’s a huge scope for private sector companies to invest from their balance sheets into startups”.

As start-ups look for a diverse set of sources for funding, Info Edge India’s Bikhchandani said India needs a higher contribution of investment from corporates and business conglomerates in new ventures.

“Venture capital funds or angel investors are only one part of sources of funds for startups… there’s a huge scope for private sector companies to invest from their balance sheets into startups. Typically they would do it in their own strategic areas… but I think India could do with more of that,” Bikhchandani said. “There is some participation and support (from larger corporates) this time in Startup Mahakumbh. Hopefully, in future years there will be more.”

Zomato’s co-founder and CEO Deepinder Goyal also underlined a similar sentiment. “I think established businesses need to nurture startups…and I don’t think we have that kind of a culture yet… Larger businesses also need to start funding startups but not with an intention to own them but with an intention to help them become bigger,” he said.

Investors seem bullish about the country’s start-up journey despite a blip in the last two years. Peak XV Managing Director Rajan Anandan claimed that close to $20 billion of private capital is lying uninvested and is committed for investment in Indian start-ups. He added that the investment run rate in Indian start-ups before 2021 and 2022, was about $8-10 billion, which increased to $60 billion in the two years.