{"id":32537,"date":"2019-05-02T10:56:38","date_gmt":"2019-05-02T05:26:38","guid":{"rendered":"http:\/\/officechai.com\/?p=32537"},"modified":"2019-05-02T11:01:11","modified_gmt":"2019-05-02T05:31:11","slug":"investors-choosing-finance-indian-startups-despite-regulatory-hurdles","status":"publish","type":"post","link":"https:\/\/officechai.com\/startups\/investors-choosing-finance-indian-startups-despite-regulatory-hurdles\/","title":{"rendered":"Investors Are Choosing To Finance Indian Startups Despite Regulatory Hurdles"},"content":{"rendered":"

India\u2019s startups have faced a whole host challenges over the past few years \u2014 namely, insufficient early-stage funding, increased tax, and regulatory obstacles. A notable recent example is the\u00a0now-lifted ban on short-video sharing app<\/a><\/span>, TikTok, which frustrated both startups and investors. Nevertheless, investors are now choosing to\u00a0accept the risks posed by regulatory hurdles<\/a><\/span>\u00a0and finance promising startups set to bring in major returns long-term.<\/span><\/p>\n

\"salary-hike-for-engineers-in-startups\"<\/p>\n

Rise in unicorn startups<\/strong>\u00a0<\/span><\/p>\n

The recent uncertainty surrounding angel tax<\/span>\u00a0<\/a><\/span>caused an overall drop in money poured into startups in India in 2018. Tech firms last year raised $10 billion, which is 5% less than the $11 billion raised in 2017. The number of funding rounds also dropped from 1,161 in 2017 to 924 in 2018. This year, however, a select few\u00a0startups are successfully funding their businesses<\/span><\/a><\/span>\u00a0as investors choose to back the most promising of projects rather than spreading themselves thinly across multiple deals. In fact, 2018 saw the creation of eight unicorns \u2014 startups valued at over $1 billion. For example, food-tech company, Zomato, raised $200 million which puts its total value at $1.1 billion. Swiggy, another food-tech firm, is now worth $1.2 billion after raising $210 million primarily from Naspers and DST Global. India now ranks third in global startup ecosystems behind only the US and the UK.<\/span><\/p>\n

Other impressive investments<\/strong><\/span><\/p>\n

Bengaluru-based bike-taxi startup, Rapido, is facing opposition from the Karnataka transport department for violating commercial license laws. However, the company has been growing at a rate of 25% per month and is set to receive\u00a0$30 million from WestBridge Capital<\/a><\/span>\u00a0and a further $10 million from Nexus Venture Partners. E-pharmacies have been banned across India by Delhi high court, and yet Netmeds, Medlife, 1mg, and PharmEasy are currently raising between $100 and $200 million. And Dream11<\/a><\/span>, a fantasy sports startup, is now India\u2019s newest unicorn after raising $60 million from Steadview Capital \u2014 despite a recent ban on startups offering online games with money stakes.<\/span><\/p>\n

Long-term approach to investing<\/strong><\/span><\/p>\n

Venture Capitalists are used to the regulatory uncertainties that come with the territory in India and know they\u2019re only short-term. \u201cSome investors want to take bets in sectors which are growing and have assessed the risks attached to them. The laws are very dynamic in these sectors and subject to periodic shifts,” says IndusLaw partner, Winnie Shekhar. Investors weigh up the risks and rewards with a long-term view, and even \u201chave the ability to address issues and pivot even in a changing regulatory system” Shekhar explains<\/a><\/span>. Uber is a great example \u2014 they\u2019ve recently secured a $1B investment from Toyota and Softbank Vision Fund despite experiencing regulatory hurdles right from the beginning.<\/span><\/p>\n

Ultimately, boom and bust cycles are expected and even welcomed by investors as a source of creative disruption. \u201cEntrepreneurs come up with new ideas and those ideas have limited validation until they prove it, and they create excitement around it\u201d, Avnish Bajaj, managing director of venture capital firm Matrix Partners, \u00a0told Quartz. \u201cWithout that excitement, capital wouldn\u2019t follow, and without capital, one wouldn\u2019t know which ideas will work”.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

India\u2019s startups have faced a whole host challenges over the past few years \u2014 namely, insufficient early-stage funding, increased tax, and regulatory obstacles….<\/p>\n","protected":false},"author":8,"featured_media":24532,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[254],"tags":[],"class_list":["post-32537","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-startups"],"yoast_head":"\nInvestors Are Choosing To Finance Indian Startups Despite Regulatory Hurdles<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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