Moment of truth for Indian startups likely next year: Flipkart's Kalyan Krishnamurthy

"What happens to public stocks will eventually happen to private stocks with a timing difference. And what happens to global markets will eventually translate everywhere," he said.

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Apart from Krishnamurthy, the panel consisted of Udaan co-founder Sujeet Kumar, Zerodha co-founder Nikhil Kamath, and Ashutosh Sharma, head of investments for India at Prosus Ventures. It was moderated by Prashanth Prakash, co-founder of Accel India.

Sharma said that they are not currently seeing the kind of valuation correction in India that they are witnessing elsewhere in the world, since many companies have either raised enough capital or are profitable/almost profitable, due to which they don't need to raise more capital.

"If these challenges go on for a year or two, then probably you will see something, but not yet," he said.

On a long-term basis, he said, most global investors are bullish on the India story since the country provides the opportunity for long-term compounding.

Krishnamurthy also echoed this sentiment saying that India as a package continues to be a strong story for investors, due to a multi-lingual, high-educated, English-speaking democracy, and getting wealthier and more digitally-enabled in the last few years.

In addition, business has also democratised in a big way, even reaching the hinterlands of the country, Krishnamurthy said. However, he believes they are still scratching the surface at present.

"All of these put together, you don't see in any other country today. So overall, if you take a 10-20-year view, India is a very strong story," he said.

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Backing innovative ideas

Udaan Co-founder Sujeet Kumar, who is also an active investor in early-stage start-ups, said that venture capital firms have to encourage people who come with long-term innovative ideas and technological changes.

"Most of our engagements are commercial ones, like number of users, how much revenue, and how much growth. But we have to incentivise (backing) our innovations," he said.

In response, Sharma said that investors were initially very risk averse in the country, but it is now slowly changing. He cited the example of Skyroot Aerospace that became India's first private company to launch a rocket into space on November 17.

"If you were to ask me three years ago, would a VC in India invest in space tech, I would say, no. But now people are investing and we are seeing so many companies. I'm not saying that we are there. But I think on the risk curve, we are trending in the right direction," he said.

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Sharma said it is also a matter of confidence in the ecosystem. "The early innovation happened in areas where we drew inspiration from elsewhere but now we are at a stage where we are seeing companies in Southeast Asia or Africa taking inspiration from Indian startups. Hence, the confidence and risk-taking in new original ideas in far-out sectors is happening," he said.

Prakash also said that India's broader VC ecosystem is definitely shifting gears in the country. "Maybe sometimes the younger seed funds do a little bit more of early risk taking, but I'm starting to see more and more of risky bets," he said.