India’s startup companies lacking guardian ‘angels’
MUMBAI: It is seen as a land of entrepreneurs, economic growth and huge business potential, but India appears to be failing its promising startup companies which are struggling to find investors.
While there is no lack of ideas among the country’s vast young population, funding is declining from venture capitalists and rich ‘angel’ investors, as they are known, who are often crucial to a young firm’s success.
“Risk-taking appetite from investors is low,” said Internet entrepreneur Nameet Potnis, who was trying to address the problem by setting up Nurtured. in, a platform to connect startups with early-stage investors.
“It is easy to set up an online business in India but very difficult to do business,” he told AFP.
Three decades after businessman N R Narayana Murthy and six other Indians sat around a kitchen table and formed leading IT outsourcer Infosys, the country is yet to create a favourable business environment for new entrepreneurs.
Just five per cent of thousands of Indian startups got funds from sources external to friends and family, analysts said.
It is one of the toughest countries in the world for a startup to flourish, according to a 2012 report by US-based research firm Startup Genome.
Venture capitalists invested US$ 1.09 billion through 222 deals in 2011, but this dropped by 30 per cent to US$ 762 million through 206 deals in 2012, according to researchers at Venture Intelligence, based in southern Chennai city.
The decline could not come at a worse time for the young Indian professionals and business graduates who were risking branching out on their own, after losing or quitting lucrative jobs amid the global downturn.
India’s own economic growth slowed to an estimated five per cent for the fiscal year that ended March, its slowest rate in a decade, but that has not deterred many youngsters from trying to turn their ideas into businesses.
Some of India’s well- established startups include Nasdaq-listed online travel firm makemytrip. com, shopping website Flipkart and digital entertainment company Hungama.
In recent years, ventures have branched into areas as varied as pet care, gaming, restaurant guides and e-learning, and the startup bug is spreading into smaller Indian cities. — AFP