MagicalHamster
MagicalHamster

Discussion: Startups in India, Funding Activity

Been long since I wrote here. A casual post to discuss anything startup/VC related. Which startups are doing good, which ones not too good. Especially if you're a founder - how is the market feeling?

My pov: despite the excess capital with VCs, funding is still very much dry. For a bit during the last year, there was a flurry of investments in SaaS and AI. Even that has dried up now. Slowest I have seen.

Why: I think there's no push factor to invest, there's a lack of people starting up (vs. previous years). Awaiting some inflection point, so that things kickstart again.

6mo ago
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SnoozyWalrus
SnoozyWalrus
Uber6mo

My pov- am part of some of these startup communities and spoke to VCs over last 2 months.

  1. India is a copycat model - and very few examples to copy from us/China currently. Where the focus is AI, robotics, autonomous, green transition ; which is honestly not in Indian ecosystem capability right now
  2. most of the recent funding is on traction on tier 1 founder creds. There seems to be a perception that everything in consumer, fintech and saas is done. I disagree with this point, India is one of the rare large growing economies
  3. startups are no longer cool - tourist founders/vcs are out, but it’s a great time to build for cheap/available talent
  4. there are sectors like edtech which is completely dead, unless AI something edtech. This is unfortunate. Similar trend playing out in b2b, way too many frauds and scams. Logistics generally needs money to build network scale, otherwise it’s not attractive to users. These are all extremely big segments…..
  5. in general, heavy trend towards being revenue generative early on
  6. lot of funding going towards non VC segments like coffee chains, physical NBFCs, consumer brands, etc. all indicating a very low risk/low reward mindset
  7. VCs giving trash ideas and thesis on what sectors to work in. These are normally a brain dump from WA chats with 5 founders in their portfolio. Relative inflexibility from going away from thesis, unless traction.
MagicalHamster
MagicalHamster

1 - B2B & Dukaan Tech was quite unique to India, but got pretty fucked. 2 - SO FUCKING TRUE. There aren't enough good founders, but lots of "dry powder" and so any hotshot founder instantly gets a $5-10Mn cheque. 3 - A good thing! 4 - AI something Edtech will be nice, yet to see great examples in India. 5 - I don't like this so much. It inhibits large consumer businesses. But okay, it's the sign of the times. 6 - Fuck yes - you are spot on. It's been a surprising transition for me. Models that were earlier always PE types, are now attractive to VCs. 7 - Hahahaha, I do write theses at my fund, don't know where those land up

Love the points. Curious, what do you do? That's too many things very spot on.

SqueakyKoala
SqueakyKoala

Spot on @AngryBus91 . Another pt to startup becoming unsexy, only seeing ‘older’ founders raising funding like >5 yrs of sector expertise

ZippyMochi
ZippyMochi

I just helped a "tier 1" undergrad with pitch deck and GTM for a VCs business idea that he has no idea how to build but is doing it because the VCs want him to 🤡

ZippyMochi
ZippyMochi

Speaking as a founder I'm honestly seeing a revival in funding interest in fundamentally good and sound businesses generating decent profit.

Also seeing multiple money making opportunities in various domains but I have limited time and resources at hand to pursue them.

Had an idea around a tool recently that could compete with Adobe and Canva. But with tech and SaaS, there's no longer any defensible moat as such. Doesn't take long to get copied, need relentless execution and decent funding to even get a small percentage of market share. Goal would be acquisition I suppose.

BouncyTaco
BouncyTaco

@LooseGoose any other interesting ideas that have potential? Any untapped pockets in outsourcing?

PeppyCupcake
PeppyCupcake

Why are people not building startups? Why do you think that is ?

PeppyCupcake
PeppyCupcake

Also, does not go with what I see on X and linkedIN at least.

MagicalHamster
MagicalHamster

Lesser funding. Lesser layoffs. Leading to lesser impetus to quit and start something new.

Can see it in data too basis how many new startups pop up in sourcing

PeppyUnicorn
PeppyUnicorn

Has due diligence become better by any chance?

MagicalHamster
MagicalHamster

It has, yes. We have more time to evaluate, so we go deeper. In 2020/2021, often we would have to evaluate a startup within a few days because some hotshot fund was evaluating/investing in them. Now that's not the case, you usually get more time to go into the details.

I like that.

ZippyPretzel
ZippyPretzel
Meta6mo

My pov is that Indian VCs were worst thing that could have happened to Indian startups system. A bunch of non-founders consultants who didn’t do any real work in their work experience and shuffled and format a couple of ppts became VCs in India. These people didn’t know how to pick right company. All they incentivize was bad players in the startup ecosystem who only motive was to how to raise next round to make money. I hate to say but with such a large population, India has failed to create a single world- level startup. All are copy cats or failed startups with zero business model. The first thing India needs is cleaning its house and make sure entrepreneurs are positively incentivized rather than being taught how to run away with money

MagicalHamster
MagicalHamster

Extremely well put. I personally come from a non IIT non MBB background but 80% of the people I work with have one of those, or both.

You're very right about the problems. I don't feel the ecosystem hasn't done well though, I feel within those people, there are some who aren't constrained by their past consultant lives and actually think originally and have invested well.

But you're quite right. I love that take.

ZestyNugget
ZestyNugget

POV of a 1st Generation founder from a tier 2 city with very less or inactive startup ecosystem.
"Been 4 years since I started my journey as a founder of a SaaS platform for car and bike rentals. Business started with 1 car and now I have a fleet of 25 cars, Visakhapatnam being a seasonal tourist spot business has been up and down. But financial year 23 - 24 we have done a revenue of 35 lakhs. Now it is time to scale but as we are a completely bootstrapped startup with little to no fuding except for putting back the money and survive with what is left on the side we are a stagnant point. And all this is just done 1 person that is me. I deliver the cars I give them for wash I pick them up I send them for service. I talk to the clients and the car vendors too. I love doing it every single day. Us being a SaaS platform I have no technical knowledge whatsoever. I have learnt wix and google ads on my own and have been doing them since the beginning.
Now when I have done PMEGP certification course I was said I would receive funding and there are loans as well announced by the central govt which are collateral free. But when I ask banks the say they deny saying I need to put up collateral. There is no ecosystem for me to learn how funding works or how VCs work so on so fourth. In the meanwhile I have been approached by many new outlets or magazines to write articles on me and the startup but there is a catch I need to pay them, in that are those even genuine cause now any one can buy these slots and have their articles and praises written ad they will and wish. My idea is very simple provide business to people who can't pay their vehicles EMIs while renting their vehicles out. And I want make money while doing so. But from here on don't know where to go whom to approach for guidance so on.

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