While the early stage entrepreneurs in India are not as seasoned as the ones in the US, there's also not enough risk money going into the ventures, feels IAN.
India's startup ecosystem is at a nascent stage and is in dire need of domestic capital. While the early stage entrepreneurs in India are not as seasoned as the ones in the US, there's also not enough risk money going into the ventures, feels Saurabh Srivastava, co-founder of Indian Angel Network.
"If you look at most of the VC money in India, it's mainly money from the overseas and not domestic. We have no domestic asset class. Globally where does the venture capital money comes from? It comes from pension funds, sovereign wealth offices....India has no such source," Srivastava said at Global Conference on Cyberspace 2017 explaining why investors have limited appetite for risk taking in early stage startups in India.
The other reason, according to Srivastava is the lack of friendly tax laws for angel investments in India, unlike the other parts of the globe where the government incentivize the angels given that they deal in high risk investments.
"In India, forget tax credits, there's tax for angel investments too. So it is not a very friendly environment. Angels are typically first generation middle class entrepreneurs for whom being in the business was an accident not a destiny," he said.
"First generation entrepreneurship is barely two decades old... there is an explosion...10 years ago there were nothing....10 years ago we had just 6-7 people (in IAN)....now it is over 450," he added.
Srivastava said that the entrepreneurial explosion in India is very recent.
"Our entrepreneurs are not as seasoned as in the US.. the whole ecosystem isn't there to support them, to do it," he said.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .