Tough times face India’s star-studded start-up ecosystem, but is there light at the end of the tunnel? That India’s start-up space has been on a roll since 2016 is an understatement. The country’s confounding and frequently downgraded growth projections notwithstanding, investors have bet big bucks on Indian start-ups. According to an EY report, investments by private equity (PE) players and venture capitalists (VCs) in start-ups have been rising each year — from $3.1 billion in 2016 to $7.9 billion in 2019 (See: Big-ticket deals). In fact, last year marked a record high for start-up investments both in terms of value as well as volume. Understandably, the ecosystem was optimistic about the new decade, until the spread of coronavirus threw a spanner in the works. During such times, who better than serial entrepreneur and promoter of several start-ups including Bigbasket, Portea Medical and HungerBox to discuss the impact of the pandemic on Indian start-ups? In this exclusive interview with Outlook Business, K Ganesh, co-founder, GrowthStory says how start-ups are dealing with the crisis and what they must do to survive.
How have the dynamics changed since last year?
We saw some major developments in 2019 that impacted sentiment and shifted focus toward unit metrics and profitability. Vanity metrics and the concept of ‘growth at any cost’ were taking a back seat. This shift was largely led by herd mentality, because of what happened at SoftBank, WeWork, and the fact that Uber and Lyft IPOs were not blockbusters. But it was understandable and we were all ready to handle that; only the pitch decks and memorandums were changed. But this pandemic came out of nowhere, something that no one was prepared for. Now, it is a world-war situation from what earlier seemed like a skirmish at the border.
Does the VC/PE point of view get impacted due to the crisis?
The venture capital/private equity segment is a long-term play. A typical period (before expecting return) is about 10 years — seven-year front plus another year or two. Every investor, be it a high-net-worth individual, pension fund investor, or an institutional investor, knows that it is a high risk, h